How To Get Out Of A Contract With Car Mart America’s Car-Mart Exceeds Q1 Sales Projections America’s Car-Mart (NASDAQ: CRMT), a used-car retailer, outperformed market expectations in Q1 FY2024, reporting a 9.27% year-over-year increase in revenue, reaching $368 million. The company refrained from providing forward-looking revenue guidance. In terms of earnings per share (EPS), America’s Car-Mart recorded a GAAP profit of $0.63 per share, a decrease from $2.07 per share in the corresponding quarter of the previous year.
Key Highlights from America’s Car-Mart’s Q1 FY2024 Results:
- Revenue: $368 million, surpassing analyst estimates of $363.8 million by 1.15%.
- EPS: $0.63, falling short of analyst expectations of $0.91 by 31%.
- Free Cash Flow: -$46.2 million, compared to -$67.3 million in the same quarter the previous year.
- Gross Margin (GAAP): 44.6%, up from 42.7% in the corresponding quarter of the previous year.
- Same-Store Sales: Increased by 8.2% year over year, surpassing expectations of a 7.5% year-over-year increase.
- Store Locations: 155 at the end of the quarter, reflecting a net increase of 1 over the past 12 months.
CEO Jeff Williams commented on the results, noting that while the first quarter showed improvements in various aspects of the business, such as unit sales, gross margin, and cost management, there was an increase in the provision for loan losses due to factors like post-stimulus normalization of charge-offs, additional provisioning from longer contract terms, and higher average interest rates. He emphasized that the credit results on the portfolio remained consistent with historical levels despite these changes.
Analysis of America’s Car-Mart’s Q1 Performance:
America’s Car-Mart demonstrated strong revenue growth of 9.27% year over year, exceeding analyst expectations by 1.15%. Looking forward, analysts covering the company anticipate a 5.35% sales growth over the next 12 months.
The company’s steady growth over the past four years, with an annualized revenue growth rate of 20.7%, indicates its ability to thrive despite its small size compared to larger competitors. This quarter’s performance aligns with its historical growth trend.
Store Count and Same-Store Sales:
America’s Car-Mart has maintained a consistent number of retail locations, indicating stable demand and a focus on operational efficiency. The company operated 155 stores at the end of the quarter, in line with the count from the previous year. The company’s growth comes from increased sales at existing stores rather than significant expansion.
Same-store sales, a crucial metric for tracking demand, have shown impressive performance, with an average increase of 19.6% year over year over the last eight quarters. In the latest quarter, same-store sales grew by 8.2% year over year, although this represented a slowdown compared to the 21.5% year-over-year increase reported a year ago.
Key Takeaways from America’s Car-Mart’s Q1 Results:
Despite being a smaller company with a market capitalization of $643.1 million, America’s Car-Mart maintains a stable financial position with over $6.31 million in cash and near break-even free cash flow margins. However, it faced challenges in this quarter, including a significant increase in provision for loan losses, leading to a substantial miss in EPS and a 13.7% stock price decline.
Investors considering America’s Car-Mart should assess its valuation, business qualities, and recent performance. To explore these aspects further, refer to the full research report available for review.
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