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CarMax, Inc. (KMX), headquartered in Richmond, Virginia, operates as a retailer of used vehicles and related products. With a market cap of $13 billion, the company offers used cars, vans, electric vehicles, and light trucks, as well as provides rental, maintenance, post warranty repairs, mechanical and painting work, diagnosis insurance, valuation, and security services.

Companies worth $10 billion or more are generally described as “large-cap stocks,” and KMX perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the auto & truck dealerships industry. CarMax's position as the largest used-vehicle retailer in the U.S. is solidified by its market dominance and strong brand recognition. Its no-haggle pricing approach and customer-friendly sales process have built a loyal customer base. The omni-channel platform offers flexibility for customers to buy online or in-store, enhancing satisfaction and expanding the company's market reach.

Despite its notable strength, KMX slipped 8.2% from its 52-week high of $91.25, achieved on Dec. 19. Over the past three months, KMX stock has gained 8.3%, underperforming the Nasdaq Composite’s ($NASX)8.8% gains during the same time frame.

In the longer term, shares of KMX rose 14.2% over the past six months, outperforming NASX’s six-month gains of 10.4%. However, KMX climbed 7.4% over the past 52 weeks, underperforming NASX’s solid 30.6% returns over the last year.

KMX has been trading above its 50-day and 200-day moving averages since early November, with slight fluctuations, indicating a bullish trend.

CarMax's underperformance can be attributed to a stronger than expected but struggling used car market and the impact of lower rates already factored in. CarMax's demand has been shrinking over the last two years with same-store sales declining annually by an average of 8.4%. This performance raises concerns as it indicates that CarMax is artificially boosting revenue by building new stores rather than seeing growth in existing stores.

On Dec. 19, KMX shares closed up more than 3% after reporting its Q3 results. Its EPS of $0.81 beat Wall Street expectations of $0.62. The company’s revenue was $6.2 billion, beating Wall Street forecasts of $6 billion.

In the competitive arena of auto & truck dealerships, Carvana Co. (CVNA) has taken the lead over KMX, showing resilience with a 61.9% uptick over the past six months and 295.5% gains over the past 52 weeks.

Wall Street analysts are moderately bullish on KMX’s prospects. The stock has a consensus “Moderate Buy” rating from the 17 analysts covering it, and the mean price target of $85.15 suggests a potential upside of 1.6% from current price levels.

On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. More news from Barchart

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.