Is CarMax (KMX) Facing Cyclical Weakness?

2 days ago 7

Soumya Eswaran

Fri, November 28, 2025 astatine 6:48 AM CST 3 min read

Ariel Investments, an concern absorption company, released its “Ariel Mid Cap Value Strategy” third-quarter 2025 capitalist letter. A transcript of the missive tin beryllium downloaded here. US equities continued their rally successful the 3rd quarter, fueled by the Federal Reserve's archetypal complaint chopped of the year, beardown firm net growth, and accrued marketplace participation. In the quarter, Ariel Mid Cap Value Composite returned +9.62% gross of fees (+9.47% nett of fees) against this backdrop, importantly outperforming the +6.18% summation of the Russell Midcap Value Index and the +5.33% instrumentality of the Russell Midcap Index. In addition, you tin cheque the fund’s apical 5 holdings to find its champion picks for 2025.

In its third-quarter 2025 capitalist letter, Ariel Mid Cap Value Strategy highlighted stocks specified arsenic CarMax, Inc. (NYSE:KMX). CarMax, Inc. (NYSE:KMX) is simply a utilized conveyance retailer headquartered successful Richmond, Virginia. The one-month instrumentality of CarMax, Inc. (NYSE:KMX) was -8.77%, and its shares mislaid 54.84% of their worth implicit the past 52 weeks. On November 27, 2025, CarMax, Inc. (NYSE:KMX) banal closed astatine $38.20 per share, with a marketplace capitalization of $5.733 billion.

Ariel Mid Cap Value Strategy stated the pursuing regarding CarMax, Inc. (NYSE:KMX) successful its 3rd 4th 2025 capitalist letter:

"Alternatively, CarMax, Inc. (NYSE:KMX), a starring utilized and wholesale conveyance auction operator, was the largest show detractor during the period, pursuing disappointing net resulting from little portion income and accrued indebtedness nonaccomplishment provisions. Management cited normalized request aft customers sought to bargain successful beforehand of imaginable tariffs past quarter. The emergence successful provisions was concentrated successful pandemic-era loans, which person underperformed, portion newer vintages are tracking in-line with expectations indicating the recognition deterioration is mostly contained. We presumption the weakness arsenic cyclical, reflecting broader macroeconomic and manufacture volatility alternatively than structural concerns. As the marketplace stock person successful utilized vehicles, we judge CarMax’s standard and omnichannel capabilities presumption it good for agelong word maturation erstwhile conditions stabilize."

“Don’t Sell It Down Here — That’s a Remarkable Decline”

CarMax, Inc. (NYSE:KMX) is not connected our database of 30 Most Popular Stocks Among Hedge Funds. According to our database, 54 hedge money portfolios held CarMax, Inc. (NYSE:KMX) astatine the extremity of the 3rd quarter, the aforesaid arsenic successful the erstwhile quarter. CarMax, Inc. (NYSE:KMX) reported full sales of $6.6 cardinal successful the fiscal 2nd 4th of 2026, a 6% diminution from past twelvemonth owed to little volume. While we admit the imaginable of CarMax, Inc. (NYSE:KMX) arsenic an investment, we judge definite AI stocks connection greater upside imaginable and transportation little downside risk. If you're looking for an highly undervalued AI banal that besides stands to payment importantly from Trump-era tariffs and the onshoring trend, spot our escaped study connected the best short-term AI stock.