Core Insights - CarMax is currently facing financial challenges, including declining revenues and unit sales, which have led analysts to set a price target of $36 for its stock, indicating potential downside from its current trading price of $39.34 [1][3] Company Overview - CarMax, Inc. is a leading retailer of used vehicles in the United States, operating through two segments: CarMax Sales Operations and CarMax Auto Finance. The company is facing competition from other used car retailers and online platforms [2] Financial Performance - In Q3 2025, CarMax reported an 8% decrease in retail used vehicle unit sales and a 12.9% reduction in total gross profit, attributed to intense competition and stabilization of used car prices [3] - The stock has fluctuated between $38.34 and $41.97 on a recent trading day, with a market capitalization of approximately $5.91 billion and a trading volume of 12.26 million shares on the NYSE [4] Management Actions - Despite the financial challenges, CarMax is actively repurchasing shares, with $1.36 billion authorized for this purpose, signaling management's confidence in the company's future prospects [4]

Core Insights - Makaira Partners LLC has completely divested its stake in CarMax, amounting to an estimated $18.3 million [1][2][3] - The divestment occurred during a period of significant downsizing for Makaira, with assets under management (AUM) decreasing by 41% quarter over quarter [3][6] Company Overview - CarMax is a leading U.S. retailer of used vehicles, operating over 230 stores and utilizing both physical and digital retail channels to enhance customer engagement [5][8] - The company reported a total revenue of $26.4 billion and a net income of $521.1 million for the trailing twelve months (TTM) [3] - As of November 14, 2025, CarMax's market capitalization was approximately $5.1 billion, with a stock price of $34.43 [3] Investment Context - The decision by Makaira to exit its position in CarMax reflects a broader strategy of reducing holdings in underperforming assets, as indicated by the company's recent struggles and a challenging quarter reported by its CEO [9] - Makaira's portfolio management approach is influenced by a concentrated investment strategy, similar to that of Warren Buffett, suggesting that CarMax was not a high-conviction investment for the firm [9]

Accessibility StatementSkip Navigation SAN DIEGO, Nov. 11, 2025 /PRNewswire/ -- The law firm of Robbins Geller Rudman & Dowd LLP announces that purchasers or acquirers of CarMax, Inc. (NYSE: KMX) publicly traded securities between June 20, 2025 and November 5, 2025, inclusive (the "Class Period"), have until January 2, 2026 to seek appointment as lead plaintiff of the CarMax class action lawsuit. Captioned Cap v. CarMax, Inc., No. 25-cv-03602 (D. Md.), the CarMax class action lawsuit charges CarMax as well ...

Core Points - The CarMax class action lawsuit has been initiated against CarMax, Inc. and certain executives for alleged violations of the Securities Exchange Act of 1934 during the Class Period from June 20, 2025, to September 24, 2025 [1][3] - Investors who suffered losses during the Class Period have until January 2, 2026, to seek appointment as lead plaintiff in the lawsuit [1][5] - The lawsuit claims that CarMax overstated its growth prospects, attributing earlier growth to temporary factors related to customer behavior influenced by tariff speculation [3][4] Financial Performance - CarMax reported a 5.4% decrease in retail unit sales and a 6.3% decrease in comparable store unit sales for the second quarter of fiscal year 2026 [4] - Net earnings per diluted share fell to $0.64 from $0.85 a year ago, leading to a significant drop of approximately 20% in CarMax's share price following the announcement [4] Legal Process - The Private Securities Litigation Reform Act of 1995 allows any investor who purchased CarMax securities during the Class Period to seek lead plaintiff status, representing the interests of the class [5] - The lead plaintiff can choose a law firm to litigate the case, and participation as lead plaintiff does not affect the ability to share in any potential recovery [5] About the Law Firm - Robbins Geller Rudman & Dowd LLP is a leading law firm specializing in securities fraud and shareholder litigation, having secured over $2.5 billion for investors in 2024 alone [6] - The firm has a strong track record, being ranked 1 in monetary relief for investors in securities class action cases for four out of the last five years [6]

Core Insights - New vehicle sales remained strong in Q3 2025, driven by electric vehicle (EV) sales, but affordability issues and the expiration of EV tax credits may impact future demand [1][4] - The Federal Reserve's rate cuts are expected to gradually lower auto financing costs, providing relief to buyers and retailers [1][5] - Leading players are leveraging digitization, strategic acquisitions, cost management, and shareholder-friendly actions to maintain competitiveness [1][6][7][8] Industry Overview - The auto retail and wholesale industry is crucial for delivering vehicles and parts to consumers, operating through dealership networks and retail chains [3] - Economic conditions significantly influence the industry's performance, with consumer spending on vehicles typically increasing during economic upturns and declining during downturns [3] - The COVID-19 pandemic accelerated the industry's shift towards online tools and e-commerce, a trend expected to continue [3] Key Themes - Vehicle sales are anticipated to soften as EV demand cools and affordability issues persist, with average vehicle prices exceeding $50,000 [4][5] - The Federal Reserve's interest rate cuts may help lower auto loan costs, potentially bringing buyers back into the market [5] - Auto retailers are pursuing strategic acquisitions to expand their market reach and improve operational efficiency [6] Digitization and Customer Experience - Dealers are investing in digital platforms to enhance the buying experience, which is crucial for maintaining competitiveness in a tech-savvy market [7] - The shift towards digitization is expected to broaden customer reach and improve margins [7] Investor-Friendly Actions - Several auto retailers are committed to rewarding shareholders through buybacks and dividend increases, supported by healthy cash flow from acquisitions and cost-efficiency programs [8] Industry Performance - The Zacks Auto Retail & Wholesale industry ranks 18, placing it in the top 7% of around 245 Zacks industries, indicating positive near-term prospects [9][10] - The industry has underperformed the S&P 500 and the broader Auto, Tires, and Truck sector over the past year, returning 8.2% compared to the S&P 500's 14.7% and the sector's 40.8% [12] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 8.5X, significantly lower than the S&P 500's 18.12X and the sector's 22.41X [15] - Historical trading ranges for the industry have been between 4.78X and 10.79X over the past five years [16] Company Highlights - Asbury Automotive is expanding rapidly through acquisitions and digital innovation, with a projected annualized sales increase of around $3 billion from recent deals [19][20] - Sonic Automotive's balanced business model supports steady profitability, with significant growth expected from its EchoPark used car segment [23][24] - Penske Automotive is expanding its global footprint and maintaining a strong balance sheet, with a low debt-to-capital ratio of 14% [27][28][29] - AutoNation is enhancing its digital capabilities and expanding through acquisitions, with a focus on strengthening its market presence [32][33]

Business Strategy - Hertz has started selling its used vehicles directly to consumers [1] - The sales are conducted through the online platform Amazon [1]