What Happened?
A number of stocks fell in the afternoon session after the spike in oil prices threatened to siphon another round of discretionary spending away from store registers.
With WTI above $105 and gasoline already at $4 per gallon, every additional dollar at the pump is a dollar not spent on apparel, electronics, or home goods a dynamic that hits discretionary retailers hardest. Combined with rising freight costs, tariff pressures on imported goods, and the prospect of weaker summer foot traffic if travel and tourism patterns disrupt, retailers faced a particularly difficult margin and comp-sales setup heading into back-to-school season.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Electronics & Gaming Retailer company Best Buy (NYSE: BBY) fell 3.6%. Is now the time to buy Best Buy? Access our full analysis report here, it’s free.
- Vehicle Retailer company CarMax (NYSE: KMX) fell 4.1%. Is now the time to buy CarMax? Access our full analysis report here, it’s free.
- Home Improvement Retailer company Lowe's (NYSE: LOW) fell 3.5%. Is now the time to buy Lowe's? Access our full analysis report here, it’s free.
Zooming In On CarMax (KMX)
CarMax’s shares are somewhat volatile and have had 13 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 7 months ago when the stock dropped 23.4% on the news that the company reported third-quarter 2025 results that significantly missed Wall Street's expectations.
The company posted earnings of $0.64 per share, which fell far short of the anticipated $1.03 per share and marked a 24.7% drop from the previous year. Revenue also disappointed, coming in at $6.59 billion, below the consensus estimate of $7.07 billion and representing a 6% decrease year-over-year. The poor performance was driven by weakening demand, as same-store sales fell 7.1%. Adding to concerns, profitability worsened, with the operating margin declining to 1.8% from 2.9% in the same quarter last year.
CarMax is down 6.3% since the beginning of the year, and at $36.82 per share, it is trading 48.6% below its 52-week high of $71.57 from July 2025. Investors who bought $1,000 worth of CarMax’s shares 5 years ago would now be looking at only $267.94.
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