What's behind CarMax's latest 4.6% stock surge?

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Carmax rises 4.61% today to $59.16

Highlights

CarMax posted fiscal second-quarter earnings per share of $1.16 on revenue of $7.88 billion, exceeding analyst estimates.
Used retail vehicle sales increased 13.8% and CarMax Auto Finance income grew 32%, aided by lower loan loss provisions and gains on loan sales.
Shares of CarMax face short- and medium-term selling pressure with a sideways price corridor of $57.06 to $65.21 expected near term.

Revenue growth and lower provisions fuel optimism amid buyback resumption

CarMax reported fiscal 2027 second-quarter earnings per share of $1.16 and revenue of $7.88 billion, both exceeding analyst forecasts. The company achieved a 13.8% increase in used retail vehicle sales and a 32% gain in CarMax Auto Finance income, supported by lower loan loss provisions and gains on auto loan sales. CarMax plans to resume share repurchases in the third quarter, with $1.31 billion left under its current authorization. The ongoing cost efficiency program targets $200 million in SG&A savings by the end of fiscal 2027.

Anton Kharitonov, expert at Traders Union, notes that CarMax's initial post-earnings advance is undermined by weak technical momentum. He points to the stock’s struggle below both the 20-day and 50-day moving averages, with most short-term indicators flashing bearish signals. Despite a strong quarter and plans to resume share buybacks, Kharitonov argues that negative momentum and high volatility suggest sellers remain in control for now. He believes risks are heightened by the divergence between intraday buying power and persistent selling pressure. "Despite positive news flow, I see limited upside until technical barriers are overcome and short-term direction turns more constructive," Kharitonov says.

Viktoras Karapetjanc, expert at Traders Union, sees CarMax’s strong revenue growth, earnings beat, and cost-cutting program as reaffirming management’s ability to deliver shareholder value. He emphasizes the bullish long-term structure supported by a clear recovery in auto finance income and the promising resumption of share repurchases. Karapetjanc believes the market offers multiple bullish setups if resistance is broken, with significant upside toward $65.21 and beyond. He remains confident that operational momentum can attract further investor interest. "The bullish structure remains intact, and I expect further growth as CarMax executes on its efficiency plans and buyback program," comments Karapetjanc.

Jainam Mehta, market strategist, notes that CarMax is trading in a volatile range, with technical indicators conflicted and macro sentiment cautious. He sees a sideways short-term scenario, but is alert for a potential breakout above $65.21 if positive sentiment returns. Mehta highlights that oversold conditions and intraday divergence could offer a contrarian entry for tactical traders. "Given these mixed signals, I would wait for a definitive move before committing to a directional trade," says Mehta.

Mixed momentum signals as short-term resistance clashes with long-term support

CarMax is trading just below both its 20-day and 50-day moving averages at $59.53 and $59.38, respectively, indicating short- and medium-term pressure from sellers, but remains well above the 200-day moving average at $47.89, supporting a bullish long-term structure. The stock faces resistance near the Ichimoku Kijun at $60.14, with the week high of $59.23 acting as the near-term ceiling and $57.06 as the local floor. Momentum indicators are mostly negative: the MACD and RSI both indicate sell signals, and the CCI and Awesome Oscillator confirm bearish momentum. The ADX shows a weak trend, while the Stochastic RSI is deep in oversold territory at 11.04, signaling an oversold condition. Bull/Bear Power (BBP) is positive at 0.61, showing buyers dominate intraday but with an overbought reading. CarMax opened with an upside gap of $3.86 (6.83%), but after gaining $2.61 or 4.61% to $59.16, it is trading near the session low, with intraday volatility at 6.67%. This reflects strong opening action followed by selling pressure, diverging from the overbought BBP reading and supporting caution due to conflicting momentum signals.

Earlier, analysts noted that CarMax was exhibiting sustained bullish momentum supported by technical strength. The current article adds a new dimension, revealing that despite strong earnings and resumed buybacks, short- and medium-term momentum has turned negative, with traders advised to monitor the $57.06 to $65.21 volatility band for potential directional cues.

Source of Data: KMX Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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