Jim Cramer on CarMax: "I Would Not Own That Stock"

CarMax, Inc. (NYSE:KMX) is one of the stocks Jim Cramer discussed recently. Answering a caller’s query about the stock, Cramer remarked:

“Okay, so look, I’ve gotta tell you, that was a very, very disrupting, a shocking departure by the CEO. And I think that the business is really bad there, I mean, really bad. And I would not own that stock. I was surprised. It was, it was terrible.”

CarMax, Inc. (NYSE:KMX) sells used vehicles, including domestic, imported, luxury, hybrid, and electric categories. In addition, the company provides auctions, protection plans, and reconditioning services. During the September 25 episode, Cramer noted that the company’s customers need lower rates, as he commented:

“This morning, we got results from CarMax, oh my, the country’s largest used car dealer. They were awful, causing the stock to plunge 20%. Sales were 6% below Wall Street expectations. There was an incredibly weak… profit per car was below expectations. Big loan losses, too. Every line was suboptimal. What could help CarMax make the numbers? Well, you know exactly what, a bunch of great cuts. Their customers need lower rates as auto loans are priced off the shorter end of the yield curve, mainly two and three-year rates, ones that would come down if the Fed keeps cutting interest rates.

CarMax is a very good operator, by the way. But unless rates come down substantially, I think things will only get worse for this company. People think it’s a dog, it’s not… One thing’s for certain without rate cuts… We know the CarMax used car weakness doesn’t just, isn’t just going to stay with used cars. It’ll be new cars too.”

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Disclosure: None. This article is originally published at Insider Monkey.