Debt-to-Equity Ratio

CarMax’s Debt-to-Equity Ratio of 2.96x means the company has $2.96 of debt for every $1 of shareholder equity, indicating heavy reliance on borrowed funds.

This is far above the consumer cyclical sector median of 0.47x, placing CarMax in the 88th percentile among its peers — meaning only 12% of companies have higher leverage. Year-over-year change data is not available, but the ratio has decreased by 3.3% quarter-over-quarter, a modest improvement from the prior quarter’s 3.06x. Even with that slight decline, the extremely high debt level relative to equity remains a red flag, as it amplifies financial risk and interest expense sensitivity. The combination of a very elevated ratio and only a small quarterly drop suggests limited near-term de‑risking, making the stock more vulnerable during economic downturns or rising interest rates. This metric directly supports the overall CAUTIOUS verdict: CarMax’s heavy leverage poses a clear risk that justifies a cautious stance.

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