CarMax directors buy $735k in shares after Q1 earnings beat

CarMax directors bought $735,574 worth of shares in the days following the used-car retailer's first-quarter earnings report, filings show, a sign of confidence in the company's turnaround strategy.

Four directors purchased a combined 13,900 shares at an average price of about $53, according to Form 4 filings with the Securities and Exchange Commission. Lead Independent Director Mark O'Neil acquired the largest stake, spending $503,000 on 9,600 shares at $52.36 each. Chief Executive Officer Keith Barr bought 9,400 shares at $53.01 for $498,294, while Director Sona Chawla purchased 2,000 shares at $53.39 for $106,780.

The insider buying followed CarMax's June 17 earnings report, which showed the company earned $1.31 per share in the fiscal first quarter, beating the $0.96 consensus estimate by $0.35. Revenue rose 6.2% year-over-year to $8.01 billion, topping analyst expectations of $7.42 billion. The Richmond, Virginia-based retailer operates 240 used-car stores across the US and offers a no-haggle pricing model.

CarMax shares opened at $51.86 on Thursday and trade at 33.9 times earnings, above the sector average. The stock has a 52-week range of $30.26 to $71.99 and a market capitalization of $7.36 billion. Wall Street remains cautious: 13 analysts rate the stock a Hold, five say Sell, and only two recommend Buy, with a consensus price target of $47.73, implying roughly 8% downside from current levels.

The insider purchases suggest management sees value at current prices despite the mixed analyst sentiment. Investors will watch CarMax's fiscal second-quarter results, due in September, for evidence that the turnaround is gaining traction.

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