NEW YORK--(BUSINESS WIRE)--Why: Rosen Law Firm, a global investor rights law firm, announces an investigation of potential securities claims on behalf of shareholders of CarMax, Inc. (NYSE: KMX) resulting from allegations that CarMax may have issued materially misleading business information to the investing public. So What: If you purchased CarMax securities you may be entitled to compensation without payment of any out of pocket fees or costs through a contingency fee arrangement. The Rosen L. ...

Group 1 - Major U.S. equities indexes reached new intraday highs, driven by strong corporate earnings and the commencement of the Federal Reserve's two-day meeting [6][5] - United Parcel Service (UPS) shares surged following the company's strong quarterly results, indicating successful turnaround efforts [2][6] - Sherwin-Williams (SHW) emerged as the best-performing stock in the Dow after exceeding analysts' earnings estimates for the third quarter [2] Group 2 - PayPal (PYPL) stock experienced a significant increase after announcing a partnership with OpenAI to integrate its digital wallet into ChatGPT for purchases [2] - F5 (FFIV) shares declined due to a soft outlook, as the company anticipates disruptions in sales cycles following a recent cybersecurity incident [3] - Royal Caribbean Cruises (RCL) shares fell after reporting quarterly revenue that did not meet analysts' expectations [3][6]

Core Insights - CarMax, Inc. is currently under investigation for potential violations of federal securities laws following a significant decline in its financial performance [1][2] Financial Performance - For the second quarter of fiscal year 2026, CarMax reported a revenue decline of 6.0% year over year [2] - Total retail used vehicle revenues decreased by 7.2% [2] - Total gross profit fell by 5.6% [2] - Following the financial results announcement, CarMax's stock price dropped by $11.45 per share, approximately 20%, from $57.05 on September 24, 2025, to $45.60 on September 25, 2025 [2]

Core Viewpoint - CarMax, Inc. is under investigation for potential violations of federal securities laws, following disappointing financial results and claims regarding its assessment of car loan risks [1][2]. Financial Performance - CarMax reported a 5.4% decline in retail used unit sales, a 6.3% decline in comparable store used unit sales, and a 2.2% decline in wholesale units for Q2 of fiscal year 2026 [4]. - The company's net earnings for Q2 were approximately $95.4 million, down from $132.8 million in the previous year [4]. - A significant factor for the declines was identified as a "pull forward" in demand due to U.S. tariffs, which led to a loan loss provision of $142.2 million in the financing segment, resulting in an 11.2% year-over-year decrease in income from this segment [4]. Stock Market Reaction - Following the announcement of its disappointing financial results, CarMax's stock price fell by $11.45 per share, approximately 20%, from $57.05 on September 24, 2025, to $45.60 on September 25, 2025 [5]. Investigation Context - The investigation stems from claims that CarMax misrepresented the sustainability of demand for its vehicles and failed to properly assess the risks associated with its car loans [2][3].

Core Insights - CarMax, Inc. is identified as an oversold mid-cap stock with potential buying interest from hedge funds despite recent challenges [1] - Morgan Stanley has lowered its price target for CarMax from $80 to $56 while maintaining an Overweight rating, indicating a cautious outlook [1][3] - The firm highlighted execution risks related to CarMax's omni-channel strategy, particularly in integrating digital and physical sales amid increasing competition, especially from Carvana [2] Company Performance - CarMax's stock has recently fallen to an all-time low due to disappointing Q2 earnings, reflecting investor concerns over the normalization of the used-car market [3] - Despite the downgrade, Morgan Stanley recognizes CarMax's fundamental strengths, suggesting that the path to realizing these strengths may be more challenging than previously anticipated [3] - The stock has exhibited volatility, influenced by uncertainties regarding CarMax's ability to scale its hybrid model without further margin erosion [4] Market Position - CarMax is the largest used-vehicle retailer in the U.S., operating over 240 stores and a growing online platform that supports a no-haggle, customer-centric sales model [5]

Economic Overview - The S&P 500 achieved its best September performance in 15 years, with a 3.7% gain in September 2025 [4] - Adobe forecasts a 5.3% increase in holiday spending for the 2025 season, with Cyber Monday expected to be the largest online shopping day [4] - Mobile shopping is projected to account for 56.1% of online spending, alongside an estimated $2 billion increase in "buy now, pay later" spending [4] Housing Market - New single-family home sales rose by 20.5% in August 2025 compared to July 2025, while the number of new homes for sale decreased by 1.4% during the same period [4] Sector Performance - The Technology sector led with a 7.53% gain in September 2025, followed by Communication Services at 6.64% [4] - The Energy Select sector experienced a decline of -0.32%, while Consumer Staples and Materials sectors saw decreases of -2.31% and -2.42%, respectively [4] Employment Data - As of August 2025, job openings stood at 7.2 million, with hires at 5.1 million, quits at 3.1 million, and layoffs at 1.7 million [4] - The construction sector saw a decrease of 115,000 job openings, followed by a reduction of 61,000 in the federal government [4] Company Highlights - Warner Bros. Discovery, Inc. recorded the largest gain in the S&P 500 for September 2025, rising 67.8% following a proposed merger with Paramount [4] - CarMax was the biggest loser in the S&P 500, with a share price decline of -26.9% due to an unexpected $142 million loss provision [4] Social Trends - A survey indicated that 43% of U.S. adults believe sports betting is detrimental to society, an increase from 34% in 2022 [4] - Additionally, 40% of U.S. adults think betting negatively impacts sports, marking a 7% rise from 2022 [4] Entertainment Industry - Dwayne Johnson's new film, "The Smashing Machine," opened with an estimated $6 million across 3,345 theaters, marking the worst opening of his career [4]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against CarMax, Inc. for possible violations of federal securities laws and unlawful business practices affecting stockholders [1][2]. Investigation Details - The investigation is focused on whether CarMax has engaged in practices that may have harmed investors, particularly in light of recent financial disclosures [1][2]. - Investors who have suffered losses and are interested in discussing their legal rights are encouraged to contact the law firm [3]. Financial Performance - On April 10, 2025, CarMax reported its fourth quarter and fiscal year 2025 results, missing consensus estimates and removing long-term revenue and market share goals due to macroeconomic factors, leading to a stock price drop of $13.61 (17%) to $66.45 [6]. - On September 25, 2025, CarMax disclosed significant year-over-year declines in revenue and profit, including a 6.0% revenue decline, a 7.2% decline in total retail used vehicle revenues, and a 5.6% decline in total gross profit, attributed to inventory adjustments and a $71.3 million increase in loan loss provisions, causing shares to fall by $11.45 (20.1%) to $45.60 [6].

Core Insights - Vulcan Value Partners reported positive absolute performance across all strategies in Q3 2025, with the All-Cap Composite leading at 5.5% net return [1] - The investor letter highlighted CarMax, Inc. as a significant detractor to performance, with a one-month return of -25.97% and a 52-week loss of 40.87% [2][3] Company Performance - CarMax, Inc. is the largest used car retailer in the U.S. and has the third largest wholesale business [3] - The company experienced a 5% decline in retail volumes during Q2 2025, attributed to volatility in used car prices and demand shifts due to tariff announcements [3] - Year-to-date, CarMax's volumes and profits are up year over year, indicating potential for recovery [3] Market Outlook - Despite short-term challenges, CarMax is viewed as a strong business with favorable long-term prospects due to its competitive advantages such as customer experience, brand strength, scale, vertical integration, and omnichannel approach [3] - The company is currently under earning but is well-positioned to grow volumes and increase earnings as the market normalizes [3] - CarMax maintains a solid balance sheet, generates significant free cash flow, and is actively buying back shares, indicating confidence in its value [3]

Core Viewpoint - Bragar Eagel & Squire, P.C. is investigating potential claims against CarMax, Inc. for possible violations of federal securities laws and unlawful business practices affecting stockholders [1][2]. Investigation Details - The investigation is focused on whether CarMax has engaged in practices that may have harmed investors, particularly in light of recent financial disclosures [2]. Financial Performance - On April 10, 2025, CarMax reported its fourth quarter and fiscal year 2025 results, missing consensus estimates and removing long-term revenue, unit sales, and market share goals due to macroeconomic factors, leading to a stock price drop of $13.61 (17%) to $66.45 per share [6]. - On September 25, 2025, CarMax disclosed significant year-over-year declines in revenue and profit, including a 6.0% revenue decline, a 7.2% decline in total retail used vehicle revenues, and a 5.6% decline in total gross profit, attributed to inventory adjustments and a $71.3 million increase in loan loss provisions, causing shares to fall by $11.45 (20.1%) to $45.60 per share [6].

Core Viewpoint - The consumer discretionary sector has several oversold stocks, presenting potential buying opportunities for undervalued companies [1]. Group 1: Oversold Stocks - Goodyear Tire & Rubber Co (NASDAQ:GT) has an RSI of 20.4, with a stock price of $6.71, down 21% over the past month and a 52-week low of $6.51 [7]. - Ferrari NV (NYSE:RACE) has an RSI of 26.4, with a stock price of $382.19, gaining 0.9% recently, despite a 22% drop over the past five days [7]. - Carmax Inc (NYSE:KMX) has an RSI of 28.6, with a stock price of $44.00, down 27% over the past month and a 52-week low of $42.75 [7].