America's Car-Mart (NASDAQ:CRMT) Posts Better-Than-Expected Sales In Q1

Anthony Lee /
2024/06/18 7:36 am EDT

Used-car retailer America’s Car-Mart (NASDAQ:CRMT) reported Q1 CY2024 results beating Wall Street analysts' expectations, with revenue down 5.8% year on year to $364.7 million. It made a GAAP profit of $0.06 per share, down from its profit of $0.32 per share in the same quarter last year.

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America's Car-Mart (CRMT) Q1 CY2024 Highlights:

  • Revenue: $364.7 million vs analyst estimates of $361.4 million (small beat)
  • EPS: $0.06 vs analyst estimates of $0.20 (-$0.14 miss)
  • Gross Margin (GAAP): 17.7%, up from 15.8% in the same quarter last year
  • Free Cash Flow was -$11.74 million compared to -$12.42 million in the same quarter last year
  • Locations: 154 at quarter end, down from 156 in the same quarter last year
  • Same-Store Sales fell 5.3% year on year
  • (12% in the same quarter last year)
  • Market Capitalization: $394.9 million

With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.

Vehicle Retailer

Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.

Sales Growth

America's Car-Mart is a small retailer, which sometimes brings disadvantages compared to larger competitors that benefit from economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.

As you can see below, the company's annualized revenue growth rate of 15.8% over the last five years was impressive despite not opening many new stores, implying that growth was driven by increased sales at existing, established stores.

America's Car-Mart Total Revenue

This quarter, America's Car-Mart reported a rather uninspiring 5.8% year-on-year revenue decline to $364.7 million in revenue, in line with Wall Street's estimates. Looking ahead, Wall Street expects revenue to remain flat over the next 12 months.

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Same-Store Sales

America's Car-Mart's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 8.2% year on year. Given its flat store count over the same period, this performance stems from increased foot traffic at existing stores or higher e-commerce sales as the company shifts demand from in-store to online.

America's Car-Mart Year On Year Same Store Sales Growth

In the latest quarter, America's Car-Mart's same-store sales fell 5.3% year on year. This decline was a reversal from the 12% year-on-year increase it posted 12 months ago. We'll be keeping a close eye on the company to see if this turns into a longer-term trend.

Key Takeaways from America's Car-Mart's Q1 Results

It was good to see America's Car-Mart beat analysts' revenue expectations this quarter. On the other hand, its gross margin and EPS missed Wall Street's estimates. Overall, this was a bad quarter for America's Car-Mart. The stock is flat after reporting and currently trades at $61.45 per share.

America's Car-Mart may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.