America’s Car-Mart Inc. (CRMT) saw revenues leap 10.7% in the first quarter as same store sales also jumped 8.4%. The company has surprised on estimates the last 4 quarters by an average of 17.82%. CRMT has attractive value characteristics, with a forward P/E of 12.27.
Company Description
America’s Car-Mart is an automotive retailer that focuses on the used car market through its “Buy Here/Pay Here” program. It operates 96 dealerships in 8 states located primarily in small cities throughout the South-Central United States.
America’s Car-Mart Beat Big in the Fiscal First Quarter
While many in the auto industry are struggling in this recession, America’s Car-Mart continues to see growth.
On Sep 1, the company reported first quarter results that saw revenues jump 10.7% to $83.8 million from $75.7 million in the year ago period. Same store sales rose 8.5% and sales at four new locations added to the revenue growth.
Earnings per share were 60 cents which easily surprised on the Zacks Consensus Estimate of 41 cents.
The company showed improvement in both customers and cash flow. The active customer base rose 5% to over 44,000 for the period ending July 31. America’s Car-Mart only saw a $745,000 increase in debt during the quarter as finance receivables increased $13.3 million, or 5.8%, to $244.7 million.
Credit loss provisions also improved, declining to 19.5% of sales compared to 20.9% in the year ago period. Accounts over 30 days past due also showed improvement at 3.5% compared to 3.6% in the first quarter of 2008.
The company is not afraid of the tough economic conditions.
“The negative macro economic issues have so far been positive for us as we have a very healthy balance sheet and strong cash flows, allowing us to continue to grow our customer base without the need for significant levels of debt, unlike most of our competitors,” said William H. Henderson, President and CEO.
“We believe that the tight consumer credit markets will continue to push more people into our markets, where they will find Car-Mart to be ‘the’ choice for their next car purchase,” he added.
Zacks Consensus Estimates Rise
Given the company’s big first quarter beat, covering analysts scrambled to raise estimates for the second quarter and the full year.
The fiscal second quarter Zacks Consensus Estimate climbed 3 cents to 42 cents in the last 30 days.
The full-year Zacks Consensus Estimate jumped 18.2% to $2.01 per share with all 4 covering analysts raising in the last month.
Value Fundamentals
America’s Car-Mart is a Zacks #1 Rank (strong buy) stock. It has a price-to-book ratio of just 1.75. The company has a solid 5-year return on equity (ROE) of 12.26%.
