Starboard Value Nominates Two Directors to CarMax Board
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 11 2026
0mins
Should l Buy KMX?
Starboard Value's Jeff Smith says Carvana (CVNA) and others have been catching up, but CarMax (KMX) has "the best of both worlds" with digital and physical assets in car buying and that its business is "fairly easy to fix." Starboard buying into CarMax at tangible book value, noted Smith, who adds that CarMax "shouldn't be directly disrupted" by AI. This morning, CarMax confirmed that its board of directors received a notice from Starboard Value, nominating two directors for election to the company's board. Smith is being interviewed on Bloomberg TV.
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Analyst Views on KMX
Wall Street analysts forecast KMX stock price to fall
13 Analyst Rating
0 Buy
10 Hold
3 Sell
Hold
Current: 39.990
Low
24.00
Averages
33.60
High
37.00
Current: 39.990
Low
24.00
Averages
33.60
High
37.00
About KMX
CarMax, Inc. is a retailer of used autos. The Company operates through two segments: CarMax Sales Operations and CarMax Auto Finance (CAF). The CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations. The CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers. The CAF segment consists solely of its own finance operation that provides financing for customers buying retail vehicles from the Company. The CAF segment also services all auto loans, it originates and is responsible for providing billing statements, collecting payments, maintaining contact with delinquent customers, and arranging for the repossession of vehicles securing defaulted loans. It provides customers with a range of other related products and services, including extended protection plan (EPP) products and vehicle repair services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Record High Debt Levels: As of Q4 2025, the average amount owed on underwater trade-ins reached $7,214, a record high, with 27% of these trade-ins carrying over $10,000 in negative equity, reflecting a deterioration in consumer financial health.
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- Executive Participation: The call will feature Interim Executive Chair Tom Folliard, President and CEO Keith Barr, CFO Enrique Mayor-Mora, and EVP of CarMax Auto Finance Jon Daniels, highlighting the company's commitment to engaging with its investors.
- Financial Performance Overview: In the fiscal year ending February 2025, CarMax sold approximately 790,000 used vehicles and 540,000 wholesale vehicles, indicating strong market performance, while CarMax Auto Finance originated over $8 billion in auto loans, enhancing its nearly $18 billion loan portfolio.
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- Brand and Market Advantages: Barr praised CarMax's trusted brand and its national footprint reaching 85% of the U.S. population, arguing that these strengths create a powerful platform for growth in the large, fragmented used car market.
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- Net Income Plummets: The company's net income for Q2 was approximately $95.4 million, down 28.2% from $132.8 million a year ago, reflecting a sharp decline in profitability that may erode investor confidence.
- Executive Turnover Impact: The unexpected departure of CarMax's CEO on November 6, 2025, along with a weak preliminary Q3 outlook, could exacerbate market concerns regarding the company's future performance.
- Legal Action Risks: CarMax and its executives are facing a securities class action lawsuit for failing to disclose material information during the class period, and KSF's investigation will assess whether executives breached fiduciary duties to shareholders, potentially leading to greater legal and financial risks for the company.
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Report Overview: Recent reports from investment and research firms provide insights into analysts' perspectives on various companies.
Disclaimer: The views expressed in these reports do not reflect the opinions or recommendations of Barron’s.
Investment Services: Some report issuers may have existing or potential investment-banking relationships with the companies analyzed.
Purpose of Reports: The reports serve as a sampling of market analysis rather than definitive investment advice.
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Impact of Rising Gas Prices on EV Adoption
- Background of Rising Gas Prices: As of March 13, the average price of regular gasoline reached $3.63 per gallon, a 23.5% increase from the previous month, prompting consumer interest in electric vehicles (EVs), although rising gas prices do not directly lead to a surge in EV sales.
- Current EV Market Status: In Q2 2022, EVs accounted for 5.6% of new vehicle sales in the U.S., a significant increase from 2.7% in Q2 2021, indicating that consumer interest in EVs has risen amid high gas prices.
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Rising Negative Equity Among New Car Buyers
- Rising Negative Equity: According to J.D. Power, 30.5% of new car buyers are facing negative equity on trade-ins, up 4.2 percentage points from last year, indicating increasing market pressures that affect consumer purchasing decisions.
- Record High Debt Levels: As of Q4 2025, the average amount owed on underwater trade-ins reached $7,214, a record high, with 27% of these trade-ins carrying over $10,000 in negative equity, reflecting a deterioration in consumer financial health.
- Increased Payment Burden: The average monthly payment for buyers rolling negative equity into new loans hit $916, which is $144 higher than the average payment for all new car purchases, indicating greater financial strain on consumers when buying vehicles.
- Extended Loan Terms Trend: Among new car purchases involving negative equity, 40.7% are financed with 84-month loans, suggesting that consumers are extending loan terms to cope with high vehicle prices, thereby increasing future negative equity risks.
See More
CarMax to Report Q4 Financial Results on April 14
- Earnings Release Schedule: CarMax will report its financial results for the fourth quarter ended February 28, 2026, before the market opens on April 14, 2026, and will host a conference call at 9:00 a.m. ET, ensuring transparent communication of its performance to investors.
- Executive Participation: The call will feature Interim Executive Chair Tom Folliard, President and CEO Keith Barr, CFO Enrique Mayor-Mora, and EVP of CarMax Auto Finance Jon Daniels, highlighting the company's commitment to engaging with its investors.
- Financial Performance Overview: In the fiscal year ending February 2025, CarMax sold approximately 790,000 used vehicles and 540,000 wholesale vehicles, indicating strong market performance, while CarMax Auto Finance originated over $8 billion in auto loans, enhancing its nearly $18 billion loan portfolio.
- Company Background Information: As the largest retailer of used cars in the U.S., CarMax operates over 250 locations with more than 28,000 associates and has been recognized for 21 consecutive years as one of the Fortune 100 Best Companies to Work For, reflecting its leadership in the industry and commitment to employee satisfaction.
See More
CarMax's New CEO Emphasizes Customer-Centric Leadership
- Leadership Style Introduction: CarMax's new CEO Keith Barr emphasized a customer- and associate-centric leadership approach in his letter to shareholders, drawing on his successful experience in major hotel brands to enhance the company's competitiveness in the used car market.
- Brand and Market Advantages: Barr praised CarMax's trusted brand and its national footprint reaching 85% of the U.S. population, arguing that these strengths create a powerful platform for growth in the large, fragmented used car market.
- Technology-Driven Transformation: Barr plans to leverage technology to reduce digital friction and provide a simple, seamless, personalized omnichannel experience, thereby enhancing customer satisfaction and improving associate effectiveness to drive the company towards a more efficient operational model.
- Governance and Strategic Adjustments: In response to activist investor Starboard Value, Barr committed to implementing disciplined measures to refocus the organization, improve governance, and enhance CarMax's long-term potential to address recent performance challenges.
See More
KSF Launches Investigation into CarMax Amid Financial Declines
- Financial Performance Decline: CarMax reported a 5.4% decrease in retail unit sales and a 6.3% drop in comparable store sales for Q2 2025, indicating significant market pressure that could adversely affect future profitability.
- Net Income Plummets: The company's net income for Q2 was approximately $95.4 million, down 28.2% from $132.8 million a year ago, reflecting a sharp decline in profitability that may erode investor confidence.
- Executive Turnover Impact: The unexpected departure of CarMax's CEO on November 6, 2025, along with a weak preliminary Q3 outlook, could exacerbate market concerns regarding the company's future performance.
- Legal Action Risks: CarMax and its executives are facing a securities class action lawsuit for failing to disclose material information during the class period, and KSF's investigation will assess whether executives breached fiduciary duties to shareholders, potentially leading to greater legal and financial risks for the company.
See More
Analyst Claims Oracle Demonstrates Greater Resilience Despite AI Challenges; Also Featuring CarMax, Rivian, and Other Stocks.
Report Overview: Recent reports from investment and research firms provide insights into analysts' perspectives on various companies.
Disclaimer: The views expressed in these reports do not reflect the opinions or recommendations of Barron’s.
Investment Services: Some report issuers may have existing or potential investment-banking relationships with the companies analyzed.
Purpose of Reports: The reports serve as a sampling of market analysis rather than definitive investment advice.
See More
Impact of Rising Gas Prices on EV Adoption
- Background of Rising Gas Prices: As of March 13, the average price of regular gasoline reached $3.63 per gallon, a 23.5% increase from the previous month, prompting consumer interest in electric vehicles (EVs), although rising gas prices do not directly lead to a surge in EV sales.
- Current EV Market Status: In Q2 2022, EVs accounted for 5.6% of new vehicle sales in the U.S., a significant increase from 2.7% in Q2 2021, indicating that consumer interest in EVs has risen amid high gas prices.
- Charging Infrastructure Challenges: While urban areas are increasingly equipped with robust charging networks, rural and smaller cities still face significant challenges, meaning that factors beyond gas prices influence consumer purchasing decisions.
- Advantages of Chinese Manufacturers: Chinese EV manufacturers like BYD and Nio have rapidly expanded due to government support and domestic demand, and with integrated supply chains and lower production costs, they are expected to benefit from global EV demand growth, especially if oil prices remain high.
See More
