CarMax seen undervalued after earnings miss, strategic shift targets budget buyers amid economic challenges

CarMax's stock dropped sharply after disappointing earnings and weak guidance, but this sell-off has made the company appear undervalued. The firm is shifting its focus to older, more affordable vehicles to attract value-conscious and tier 2 customers, aligning with current economic trends. CarMax has also paused stock buybacks to concentrate on operational improvements and financial health amid economic uncertainty. Despite risks like rising loan defaults and competition, CarMax's strong free cash flow and strategic pivot suggest potential for a solid rebound.