CarMax reported quarterly earnings of $1.38 per share, surpassing the expected $1.18 per share. This performance is an improvement from the previous year’s $0.97 per share. Adjustments were made for non-recurring items.

The report shows an earnings surprise of 16.95%. Last quarter, CarMax matched the earnings estimate of $0.64 per share, which was consistent with expectations. CarMax has exceeded consensus EPS estimates twice in the past four quarters.

The company recorded revenues of $7.55 billion for the quarter ending May 2025, which is 0.40% above the projections. This marks an increase from the $7.11 billion reported a year earlier. Over the last four quarters, CarMax has also surpassed revenue estimates each time.

Since the beginning of the year, CarMax shares have declined by 21.3%, while the S&P 500 gained 1.7%. CarMax’s stock is ranked as a Zacks Rank #3 (Hold), implying an expected performance in line with the market in the near term.

Domino’s Pizza, another company in the retail-wholesale sector, is forecasting quarterly earnings of $3.94 per share. This represents a 2.2% decrease from the previous year. Domino’s revenues are expected to rise by 3.9% to $1.14 billion.

That CarMax posted adjusted earnings of $1.38 per share against an expected $1.18 tells us two things straightaway. First, there’s a clear beat on earnings, and second, this is not a one-off if we consider the trend over recent quarters. When we strip out the non-recurring costs, what we’re left with is a recurring model that appears to be faring better operationally than most had anticipated. Compare that with their performance a year ago — $0.97 per share — and the trajectory stands out.

The earnings surprise figure of nearly 17% reinforces the idea. While shorter-term beats can occasionally result from aggressive cost cuts or inventory adjustments, CarMax’s results come alongside revenues of $7.55 billion, which also topped estimates. Not by much — just 0.40% — but even a narrow beat stands out in a quarter when many in retail are still managing margin pressure. That improvement from $7.11 billion a year earlier suggests we aren’t looking at a fluke — there’s consistency across the top line as well.

It’s also not as if this is the first time. We’ve now seen CarMax beat revenue targets four quarters in a row. For earnings, it’s two beats, one match, and one miss out of the last four. That’s enough to start forming a pattern — not of shock outperformance, but of managed expectations and mild over-delivery. From a trading perspective, this predictability can create some tactical advantages in options structures — especially those that benefit from implied volatility compression.

All this might seem positive, yet the stock itself has told a different story. Shares are down more than 21% since January, even as broader benchmarks edge into positive territory. With the S&P 500 up 1.7%, the disconnect grows more noticeable. It suggests the market may have priced in broader sector risks or lingering sentiment concerns — perhaps stemming from soft used car demand, financing constraints, tighter credit for consumers, or simply multiple contraction in retail-adjacent names.

Then there’s the Zacks Rank #3 applied here — effectively a “neutral” call, indicating no meaningful outperform or underperform anticipated. While that might not trigger any aggressive movement, it signals that the expected volatility is low enough that directional bets could remain limited in the short term.

By contrast, consider Domino’s Pizza now, which stands in the same broader sector but carries a different setup. Forecast earnings of $3.94 per share mark a small drop year-over-year. Still, revenues are forecast to increase by nearly 4%, pushing through to $1.14 billion. This mixed message—lower per-share earnings but growing revenue—suggests there may be pressure on margins or a change in pricing strategy. Perhaps costs have inched up, or promotions have weighed on average ticket size.

For those of us watching derivative markets, it’s worth noting where estimates and actuals have split, and where sentiment has shifted not in response to results, but in anticipation of them. When the broader sector underperforms but specific companies deliver, the options market doesn’t always take long to adjust. Expect heightened earnings premium in front months but less momentum on follow-through unless there’s a material change in the story.

That CarMax continues to beat expectations but moves lower while Domino’s projects shrinking profits yet rising sales — that’s telling. As we look ahead, spreads may be more effective than outright risk-on positions. This isn’t the time for blind premium buying. Instead, low-delta structures, perhaps short straddles around earnings or call spreads placed slightly OTM, may offer duplicate exposure with better control on risk.

We’re watching implied volatility around earnings tighten slightly in names with repeated estimate alignment, but remain elevated where forward guidance diverges. Eyes on Vega. Watch carefully how pricing responds in the hours following earnings release, not just minutes — there’s often a secondary move that tells more about future positioning than the initial gap.