KMXCAUTIOUS

Gross Margin

10.7%

Higher than 12% of Consumer Cyclical sector peers

Updated 80h ago

Sector Performance

12th percentile

KMX

10.7%

Sector Median

36.3%

Sector Avg

30.2%

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Deep Analysis

CarMax's gross margin of 10.7% means that for every dollar of revenue, the company keeps roughly 10.7 cents after covering the direct costs of acquiring and reconditioning the vehicles it sells.

This is far below the sector median of 36.3% for Consumer Cyclical companies, placing KMX in the 12th percentile among its peers. The year-over-year change is not available, but the quarter-over-quarter change shows an improvement of +4.9% from the prior quarter's 10.2%. A gross margin that is both very low and only slightly improving suggests a persistent cost disadvantage or pricing pressure, which adds to investment risk rather than signaling a turnaround opportunity. This metric contradicts the overall CAUTIOUS verdict, because a low and only marginally improving gross margin reinforces caution, but the verdict itself is already cautious. However, the direct contradiction is that a very weak margin relative to peers supports rather than undermines the cautious stance. In plain terms, the gross margin data aligns with the bearish view that CarMax faces structural profitability challenges.

Frequently Asked Questions

What does the Gross Margin tell investors about KMX?

Gross margin reveals pricing power and cost structure. Software companies often sustain 70–80%; manufacturers typically 30–50%. Expansion is a bullish signal.

How is the Gross Margin calculated?

Gross Margin is calculated as: Gross Profit / Revenue.

How does KMX's Gross Margin compare to its sector?

KMX's Gross Margin of 10.7% compares to a Consumer Cyclical sector median of 36.3%, placing it in the 12th percentile.

Who are KMX's closest peers by Gross Margin?

The closest Consumer Cyclical peers by Gross Margin include: BBWI (42.6%), SE (44.3%), YUM (44.7%), RIDE (49.4%), CZR (50.3%).

The Formula

Gross Profit / Revenue

Why It Matters

Gross margin reveals pricing power and cost structure. Software companies often sustain 70–80%; manufacturers typically 30–50%. Expansion is a bullish signal.