CarMax(KMX) - Get Report will report fiscal fourth-quarter earnings before the open Thursday. Even though its earnings are projected to be slightly higher, its shares are falling and there is little reason to own this online new and used car seller.

At $51, shares are off 5% for the year to date and nearly 32% for the past 52 weeks. While some looked at CarMax as a bargain, the reality is that younger buyers are putting off car purchases, and that is slowing sales at all car companies including CarMax. People are also keeping their current cars longer.

For the quarter that ended in February, analysts, on average, expect CarMax to 71 cents per share on revenue of $3.68 billion, compared to a year ago when the company earned 67 cents on revenue of $3.51 billion. For the year, earnings are projected to be up 13% year over year to $3.03 per share, while revenue of $15.17 billion would mark an increase of 6.3% from the year-ago quarter.

Ordinarily, the fact that full-year earnings are projected to grow at about twice the rate of revenue would suggest a strong operational focus and a commitment by management to return value to shareholders. But that doesn't explain why the company missed both earnings and revenue estimates in its third quarter. Last week CarMax was downgraded to neutral from buy at Sterne Agee, which cited near-term competitive pressures.

With comparable sales declining almost 1% in the third quarter, CarMax, thanks to two consecutive quarters of declining new vehicle sales, is feeling the competitive pressure. 

What's more, with March auto sales data from several leading auto manufacturers showing a slight decline, this should weigh even more on CarMax's earnings. Even when the company has seen an uptick in vehicle sales, its average selling prices, which dictates the profits it makes on each sale, haven't been high enough to grow its earnings. That's something management must address to analysts on Thursday.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.