CarMax (NYSE:KMX) shares rose more than 5% since the company reported its Q4 results on Tuesday, with EPS of $0.44 beating the Street estimate of $0.20. However, revenue was $5.7 billion, worse than the Street estimate of $6.11 billion.

While Q4 GPU (gross profit per unit) was solid (wholesale GPU of $1,187, vs. Street’s $984), driven by recent price appreciation and strong dealer demand, analysts at RBC Capital are of the view that the profit environment will remain pressured for the company. The analysts expect retail prices to come down, higher rates to continue to cause affordability issues for consumers, and CAF income to decline as the net interest margin is squeezed. This, however, seems to be well understood by investors and is appropriately reflected in buy-side consensus.