CarMax Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of used-car dealership chain CarMax (NYS: KMX) sank 11% in early Thursday trading after its quarterly results came in below Wall Street expectations.

So what: While CarMax didn't whiff too badly on its second-quarter earnings ($0.49 per share versus the consensus of $0.51 per share), investors are naturally taking it as a sign of even more bad things to come. With so much exposure to the bruised consumer, it's no surprise that CarMax shares are hitting a new 52-week low on the news.

Now what: I'd cautiously look into this pullback as possible entry point. While the economic slowdown will continue to weigh on sales, the stock's forward P/E of 12 suggests that plenty of the bad news is already baked in. After all, thanks to its scale and network advantages, CarMax should at least see plenty of market-share gains against rivals like Auto Nation (NYS: AN) and Penske Automotive (NYS: PAG) in almost any macro environment.

Interested in more info on CarMax?Add it to your watchlist.

At the time thisarticle was published Fool contributorBrian Pacamparaowns no position in any of the companies mentioned. Try any of our Foolish newsletter servicesfree for 30 days.We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

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