CarMax reported on September 29 and closed up 4.7% on the day, yet the options market is signalling more anxiety now than it did before the print.
The post-earnings analyst response was broad and uniformly upward. Every firm that moved targets today raised them. UBS lifted its target to $62, Morgan Stanley to $53, Truist to $60, and RBC to $56, all while keeping neutral or hold ratings. Baird, carrying an Outperform, pushed its target to $70, and Stephens went to $74 on an Overweight. The two outright bears, BofA and BNP Paribas, raised targets too, to $50 and $48 respectively, both keeping Underperform ratings. The shape of the Street is consistent: a cluster of neutrals with a mean target around $62.60, a handful of bulls above $70, and two bears sitting well below the current $59.23 price. Nobody upgraded their rating. The reaction is acknowledgement rather than conviction.
The options picture contradicts the calm that a 4.7% pop might imply. The put/call ratio jumped to 0.64 on the day of the print, more than 3.5 standard deviations above its 20-day average of 0.51. That is the highest defensive reading in at least a year, above the prior 52-week high of 0.89 in relative terms of the z-score. The hedging that was building into earnings did not unwind with the result; if anything, it intensified. That is an unusual pattern post-print and worth watching.
Short positioning has settled into a different register entirely. Short interest now sits at 6.7% of the free float, down 25.8% over the past month and 11% lower on the week, continuing a covering trend that has been running since mid-August. From a peak of roughly 13.4 million shares short in August, positions have unwound to just under 9.85 million. The borrow market is completely unconstrained, with availability at 7,042% of shares borrowed and cost to borrow at 0.27%, the lowest in months. Shorts exited on their own terms, with no squeeze pressure at any point in the unwind.
The valuation picture is modest. A trailing PE near 18 and EV/EBITDA of 25.5 are not demanding for a consumer-facing franchise, but the EV/EBITDA multiple has compressed around 1.1 points over the week as the stock moved. Factor scores are mixed: the days-to-cover rank at 70 and utilization rank at 73 are both constructive from a short-covering perspective, but the EV/EBIT rank at 9 flags a valuation premium relative to the universe. The ORTEX short score has dropped to 43.6, down from 46.5 earlier in the month, reinforcing that short pressure is genuinely easing rather than just pausing.
The consumer credit alt data adds a note of caution. CarMax's ABS trust delinquencies ranked in the 81st percentile against other reporting trusts in the latest monthly read, meaning its loan book is showing more stress than most comparable issuers. The dataset has not yet been tested against the company's quarterly net charge-off figures, so no lead relationship can be claimed. But the bear case on the Street, centring on financing risk and a credit-sensitive customer base, has data behind it that the headline price reaction does not fully address.
With the next earnings date not until December 18, the focus shifts to whether the options defensiveness is a temporary post-earnings artefact or a signal that the market sees something the short-covering trend does not. The gap between a neutral Street consensus and a put/call ratio at a statistical extreme is the data point to track over the coming weeks.
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