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The used car market was on fire during the pandemic and Carmax (KMX) – the leading used car dealership – was a huge beneficiary. Revenue increased 68% in their fiscal year ending February 28, 2022, and EPS was +54% to $6.97. However, as the supply chain for new cars has loosened and inflation priced many consumers out of the car market KMX has taken a beating. Its stock is down more than 60% since its all-time high in November 2021.

Analysts are expecting another brutal quarter when they report earnings Thursday morning. According to Zacks, analysts expect revenue to decline 14% to $7.3 billion and EPS 63% to 61 cents. When everyone is this bearish and expectations are so low even a mediocre quarter can lead to a huge relief rally in a beaten-down stock. Therefore I’m looking to speculate on such an outcome using a small amount of money by buying KMX $68 Dec23 Calls which I just bought for $1.60.

#earnings for the week https://t.co/lObOE0dgsr $NKE $FDX $GIS $CCL $MU $RAD $FCEL $KMX $FDS $TTC $BB $PAYX $CTAS $HEI $SCS $AIR $EMBC $APOG $CAMP $CGNT $CVGW $QIPT $EPAC $BLIN $EMKR $WOR $AVO $ISPO $LMNR $MLKN $JOB $VVOS $KNW pic.twitter.com/kAYRM4Gt8w

— Earnings Whispers (@eWhispers) December 17, 2022

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