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For the fourth quarter, CarMax said that sales really stalled, dropping 28%. Comparable store used unit sales went down by 26%. Net income, however, rose 70% to 17 cents per share, which beat estimates by a very wide margin. The market was only calling for a profit of 2 cents. CarMax really put the brakes on costs and expenses. Plus, the company was helped by the fact that CarMax Auto Finance reported a profit instead of a loss.

Again, maybe I should just listen to the market, but I think buying the stock now without waiting for a substantial pullback might result in bad timing. The news flow on the auto industry is still bad.

The situation at Ford (NYSE: F) and General Motors (NYSE: GM) has not fully resolved itself (talk about understatement). The declines in traffic to CarMax lots as mentioned in the press release seem pretty significant. And the outlook for fiscal 2010 doesn't sound promising. Management really doesn't want to make any official projections (I don't necessarily blame them), but you can tell from some of the statements in that section that they aren't too confident right at the moment.

Shares of CarMax closed 6% higher on Thursday. The market was clearly excited by the earnings performance, but I would point out that, CarMax hasn't been great about consistently beating projections in the recent past.

Perhaps CarMax might make a decent trade for those who are nimble and know what they're doing, but I wouldn't risk it myself, not with the bad sales picture that the company is currently facing. The economy isn't back to its old roaring self just yet (another understatement, I think). Because of that, I think I'll avoid CarMax, no matter what the stock's price action is telling me.

Disclosure: I don't own any company mentioned; positions can change without notice.