Should You Hold CarMax (KMX)?

2 hours ago 1

Soumya Eswaran

Fri, January 23, 2026 astatine 7:56 AM CST 4 min read

Investment absorption company Vulcan Value Partners recently released its fourth-quarter 2025 capitalist letter. A transcript of the missive tin beryllium downloaded here. All the strategies of Vulcan Value Partners delivered affirmative results successful the year. The Large Cap Composite (Net) returned -1.5% successful Q4 and 7.9% YTD, the Small Cap Composite (Net) gained 3.2% successful Q4 and 9.5% YTD, The Focus Composite (Net) retuned 0.1% successful Q4 and 7.1% YTD, Focus Plus Composite (Net) returned 0.1% successful Q4 and 6.2% YTD and the All-Cap Composite (Net) returned 1.3% successful Q4 and 10.7% YTD. Despite overvalued markets, the steadfast improved its price-to-value ratios portion inactive achieving affirmative returns, prioritizing information and semipermanent gains implicit short-term performance. This concern echoes the precocious 1990s dot-com bubble, wherever hype and precocious valuations led to a crash, and today’s AI disruptions look to reflector that pattern, with investors risking overpaying for promising businesses. The steadfast is addressing specified situations by sticking to its concern discipline. For much accusation connected the firm’s champion picks successful 2025, delight cheque its apical 5 holdings. In addition, delight cheque the firm’s apical 5 holdings to cognize its champion picks successful 2025.

In its fourth-quarter 2025 capitalist letter, Vulcan Value Partners highlighted stocks similar CarMax, Inc. (NYSE:KMX). Vulcan Value Partners added CarMax, Inc. (NYSE:KMX) to its All-Cap Strategy during the quarter. CarMax, Inc. (NYSE:KMX) is simply a utilized conveyance retailer headquartered successful Richmond, Virginia. The one-month instrumentality of CarMax, Inc. (NYSE:KMX) was 21.80%, and its shares mislaid 42.19% of their worth implicit the past 52 weeks. On January 22, 2026, CarMax, Inc. (NYSE:KMX) banal closed astatine $47.83 per share, with a marketplace capitalization of $5.826 billion.

Vulcan Value Partners stated the pursuing regarding CarMax, Inc. (NYSE:KMX) successful its 4th fourth 2025 capitalist letter:

"CarMax, Inc. (NYSE:KMX) is the largest utilized car retailer successful the U.S. and has the 3rd largest conveyance wholesale concern successful the U.S. alongside a ample captive concern business. CarMax has underperformed some our and their ain expectations implicit the past 2 quarters. We judge that the factors causing the anemic results are part-macro, part-competitive, and part-operational. The utilized car manufacture is inactive feeling the effects of COVID. Very depressed utilized car supply, debased but improving caller car inventories, higher caller and utilized car prices and higher rates person combined to make a cleanable tempest that has been a headwind to CarMax and industry-wide volumes. These mostly cyclical macro factors on with the resurgence of Carvana person led to a much competitory utilized car market. Although the marketplace is competitive, we judge that CarMax’s lawsuit experience, brand, scale, vertical integration, and omnichannel attack are competitory advantages. These advantages should alteration them to stay a person and to instrumentality marketplace stock successful a highly fragmented marketplace implicit time. As a reminder astir 95% of the utilized car marketplace is made up of players not named CarMax oregon Carvana. We judge that CarMax tin vie and triumph against the franchise dealers and the smaller autarkic dealers arsenic they typically have. We besides judge that CarMax has each the assets to vie efficaciously with Carvana. We are encouraged by the operational changes the institution is making to summation volumes, little costs, and grow profitability. We expect that these changes, on with a normalizing utilized car market, volition pb to a betterment successful earnings. Although results whitethorn stay bumpy successful the short-term, we judge CarMax is simply a precise bully business, with favorable semipermanent prospects. The institution has a heavy seat of talent, a coagulated equilibrium sheet, produces important escaped currency flow, and is presently buying backmost shares astatine a important discount to our estimation of intrinsic value."