Is Carmax a Buy After Its Latest Earnings Report?

CarMax reported strong Q2 earnings with revenue up 19.5% YOY and EPS up 81.2%, but the stock fell 7% the day after the announcement, closing below its pre-earnings price. The company's new CEO implemented a competitive pricing strategy that increased unit sales and average selling prices while reducing per-unit margins. Earnings growth was driven by expanded auto financing (including Tier 2 borrowers), higher service revenues, and lower operating expenses. Despite the stock's recent volatility, analysts view CarMax as an improving turnaround play benefiting from regulatory changes and operational improvements.