America's Car-Mart (CRMT) AI Stock Analysis

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America's Car-Mart

(NASDAQ:CRMT)

71Outperform

America's Car-Mart's overall stock score reflects a mixed financial performance with challenges in profitability and growth. The company benefits from a strong balance sheet and improving cash flow. Technical indicators show short-term bullish momentum, although potential overvaluation is a concern due to a high P/E ratio. Positive developments in the earnings call support future growth prospects, despite some operational challenges.

Positive Factors

Earnings

The earnings per share beat consensus by 47%, driven primarily by lower expenses in credit provisions, interest, and depreciation & amortization.

Funding and Investment

CRMT raised +$73M with the issuance of +1.7M common shares, which should help diversify the company's overall funding profile.

Sales Performance

Significant improvements to sales per store per month, up 13% year over year and 10% better than consensus.

Negative Factors

Future Performance Expectations

We still expect q/q declines next quarter.

Operational Challenges

Many of Car-Mart's operations being manual indicates that Car-Mart is behind its peers.

Share Price Decline

Car-Mart shares have declined 23% over the past month.

America's Car-Mart (CRMT) vs. S&P 500 (SPY)

Market Cap

$396.73M

Dividend YieldN/A

Average Volume (3M)95.24K

Price to Earnings (P/E)53.4

Beta (1Y)1.51

Revenue Growth-2.26%

EPS GrowthN/A

CountryUS

Employees2,280

SectorConsumer Cyclical

Sector Strength58

IndustryAuto - Dealerships

Share Statistics

EPS (TTM)0.90

Shares Outstanding8,261,869

10 Day Avg. Volume96,799

30 Day Avg. Volume95,243

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.28

Price to Cash Flow (P/CF)-3.20

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$51.00

Price Target Upside5.33% Upside

Rating ConsensusHold

Number of Analyst Covering1

America's Car-Mart Business Overview & Revenue Model

Company DescriptionAmerica's Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer in the United States. It primarily sells older model used vehicles and provides financing for its customers. As of April 30, 2022, the company operated 154 dealerships in the South-Central United States. The company was founded in 1981 and is based in Rogers, Arkansas.

How the Company Makes MoneyAmerica's Car-Mart generates revenue primarily through the sale of used vehicles and the provision of financing solutions to its customers. The company operates a 'buy here, pay here' model, allowing it to sell cars and offer financing directly to customers. This integrated approach enables Car-Mart to earn interest income on the loans it provides. Additionally, the company benefits from repeat business and customer referrals, as well as vehicle service and repair operations that complement its sales activities. The revenue model is heavily reliant on interest income from financing, which is a significant contributor to the company's earnings.

America's Car-Mart Financial Statement Overview

Summary

America's Car-Mart shows a mixed financial position. The income statement reflects declining revenue and margins, highlighting challenges in profitability and growth. The balance sheet is strong with no debt and a good equity ratio, but low return on equity suggests inefficiencies. Cash flow has improved with positive free cash flow, but profitability remains a concern.

Income Statement

Positive

The company has seen a decline in revenue from the previous annual period, indicating challenges in growth. The gross profit margin for TTM (Trailing-Twelve-Months) stands at 38.35%, which is healthy but has decreased from prior years. The net profit margin for TTM is relatively low at 0.27%, reflecting limited profitability. EBIT and EBITDA margins have also declined, showing reduced operational efficiency.

Balance Sheet

Positive

The balance sheet shows a strong equity position with an equity ratio of 34.7% in TTM, suggesting a stable financial structure. The company has no debt in TTM, which minimizes financial risk. However, the return on equity is low at 0.64% in TTM, indicating inefficient use of equity to generate profits.

Cash Flow

Positive

The company has managed to generate positive free cash flow in TTM, a significant improvement from previous negative values. However, the free cash flow to net income ratio is high due to low net income levels. Operating cash flow to net income ratio is solid at 7.88, indicating strong cash generation relative to net income.

TTM	Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Breakdown
Income Statement		Total Revenue
1.32B	1.39B	1.41B	1.21B	918.61M	744.61M
	Gross Profit
507.43M	628.48M	599.63M	548.73M	439.46M	356.14M
	EBIT
42.71M	25.65M	64.47M	131.47M	141.22M	72.29M
	EBITDA
89.41M	32.08M	69.71M	137.59M	144.98M	76.24M
	Net Income Common Stockholders
6.74M	-31.39M	20.43M	95.01M	104.82M	51.34M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
226.00K	5.52M	9.80M	6.92M	2.89M	59.56M
	Total Assets
269.20M	1.48B	1.42B	1.15B	822.16M	667.32M
	Total Debt
51.21M	818.70M	638.60M	502.14M	290.61M	278.38M
	Net Debt
50.99M	813.18M	628.80M	495.22M	287.72M	218.82M
	Total Liabilities
88.30M	1.01B	1.12B	675.95M	415.66M	364.56M
	Stockholders Equity
180.90M	471.05M	297.42M	469.37M	406.50M	302.76M
Cash Flow		Free Cash Flow
21.09M	-80.04M	-160.21M	-135.19M	-62.76M	15.49M
	Operating Cash Flow
28.20M	-73.90M	-137.97M	-114.28M	-53.81M	20.92M
	Investing Cash Flow
-14.43M	-10.64M	-25.33M	-22.24M	-8.26M	-9.89M
	Financing Cash Flow
122.39M	110.96M	188.75M	176.22M	5.40M	46.78M

America's Car-Mart Technical Analysis

Technical Analysis Sentiment

Positive

Last Price48.42

Price Trends

50DMA

45.95

Positive

100DMA

47.96

Positive

200DMA

49.68

Negative

Market Momentum

MACD

0.44

Negative

RSI

56.93

Neutral

STOCH

68.36

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CRMT, the sentiment is Positive. The current price of 48.42 is above the 20-day moving average (MA) of 46.27, above the 50-day MA of 45.95, and below the 200-day MA of 49.68, indicating a neutral trend. The MACD of 0.44 indicates Negative momentum. The RSI at 56.93 is Neutral, neither overbought nor oversold. The STOCH value of 68.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CRMT.

America's Car-Mart Risk Analysis

America's Car-Mart disclosed 18 risk factors in its most recent earnings report. America's Car-Mart reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

America's Car-Mart Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CARS	74 Outperform	$723.58M	15.93	9.60%	―	4.35%	-58.76%
CRMT	71 Outperform	$396.73M	53.37	1.50%	―	-2.26%	―
CANG	69 Neutral	$425.51M	6.17	7.59%	―	-53.97%	―
Sector *	60 Neutral	$6.55B	11.40	3.27%	4.25%	2.38%	-21.30%
CWH	50 Neutral	$1.26B	―	-17.13%	4.15%	-2.03%	-202.23%
RMBL	44 Neutral	$86.16M	―	-110.47%	―	-12.27%	79.29%
UXIN	40 Underperform	$855.16M	―	260.24%	―	9.33%	50.69%

* Consumer Cyclical Sector Average

Performance Comparison

CRMT

America's Car-Mart

48.42

-9.99

-17.10%

CWH

Camping World Holdings

12.94

-9.23

-41.63%

CARS

Cars

11.50

-5.36

-31.79%

RMBL

RumbleON

2.38

-2.74

-53.52%

UXIN

Uxin

4.49

2.56

132.64%

CANG

Cango

4.26

2.88

208.70%

America's Car-Mart Earnings Call Summary

Earnings Call Date: Mar 6, 2025 | % Change Since: 26.23% | Next Earnings Date: May 26, 2025

Earnings Call Sentiment Positive

The earnings call highlighted several positive developments, including increased revenue, sales volume growth, and successful capital transactions. However, challenges such as rising delinquencies, increased SG&A expenses, and a difficult customer environment were noted. The company's strategic investments and leadership additions position it well for future growth.

Highlights

Revenue Increase

Total revenue increased by 8.7% despite average selling prices declining by 90 basis points. Higher sales volume and a 5.1% increase in interest income were primary drivers.

Sales Volume Growth

Sales volumes were up 13.2% for the quarter, driven by the acceleration of the annual tax season promotion and improved lead management.

Gross Margin Improvement

Gross margin improved to 35.7% from 34.2% in the prior year, aided by better vehicle procurement and disposal practices.

Improved Net Charge-offs

Net charge-offs as a percentage of average finance receivables improved to 6.1% from 6.8% in the prior year.

Successful Capital Transactions

Completed an extension and upsizing of the ABL facility to $350 million and a $200 million ABS transaction, improving capital structure.

Leadership Additions

Hired Sam Smith as Vice President of Capital Markets and Treasury and Josh Smith as Chief Technology Officer, bringing extensive experience to the team.

Lowlights

Delinquencies Increase

Accounts over 30 days past due increased by 40 basis points to 3.7% at quarter-end, attributed to winter weather impacts.

SG&A Expense Increase

SG&A expenses increased by $2.9 million or 6.7%, primarily driven by acquisitions and higher stock compensation.

Challenging Customer Environment

Persistent inflationary trends, higher used car prices, and elevated interest rates present ongoing challenges for customers.

Company Guidance

During America's Car-Mart's third quarter fiscal 2025 earnings call, the company provided several key metrics and updates. The ABL facility was extended and upsized to $350 million, maturing in March 2027, while a $200 million ABS transaction was completed with a weighted average life-adjusted coupon of 6.49%, representing a 95 basis point improvement. Sales volumes increased by 13.2%, driven by an early tax season promotion, despite a 90 basis point decline in average selling prices. Gross margin improved to 35.7% from 34.2%. Delinquencies rose by 40 basis points to 3.7% by quarter-end, yet improved post-January. Net charge-offs improved to 6.1%, down from 6.8% in the prior year. Additionally, SG&A expenses increased by 6.7% due to acquisitions and compensation, while interest expense rose slightly by $192,000. Overall, the company noted enhancements from its loan origination system and focused on maintaining quality credit in a challenging environment.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.