CarMax shares offer 15%+ upside despite margin pressure and near-term challenges.

CarMax, Inc. remains a Buy with a fair value around $50, suggesting over 15% upside from current prices in the low $40s. The company faces margin compression due to weak used car prices, increased loan loss provisions, and a shift toward riskier Tier 2 borrowers in its financing segment. However, cost-cutting measures, paused share buybacks, and conservative guidance aim to improve cash flow and support earnings recovery by fiscal 2028. New management and activist investor Starboard are expected to enhance technology focus, operational efficiency, and drive future growth for CarMax.