America’s Car-Mart Beats 4Q Earnings Forecast, Shares Rise Over 5%

America’s Car-Mart, Inc. (NASDAQ:CRMT) shares were up over 5% during the after hours, following the company’s fourth quarter 2017 earnings release. The company beat Wall Street expectations, and showed modest growth in its revenues, and significant growth in its net earnings per diluted share figure, year over year. That said, let’s take a look at America’s Car-Mart’s fourth quarter financial results, some statistics and why some traders might consider a long or short.

America’s Car-Mart 4Q 2017 Financial Results

For the full fiscal 2017 year, America’s Car-Mart reported revenues of $588M, compared to $568M in the same period in the prior fiscal year, or a 3.52% increase year over year. The company reported net income of $20.2M, or $2.49 per diluted share, for the full year, compared to a net income per diluted share of $1.33 in the 2016 fiscal year. That in mind, the 87% increase in its earnings per diluted share may have been one of the catalysts to send CRMT up over 5% last night.

Now, for the fourth quarter of the 2017 fiscal year, America’s Car-Mart, Inc. reported revenues of $153M, a slight decrease from $155M in the same period in the previous fiscal year. However, same store revenue grew by 1.3% year over year. The company also reported net earnings of $5.2M, or 72 cents per diluted share excluding a $500K non-cash after-tax charge resulting from costs associated with lot closing, compared to 40 cents per diluted share in 4Q 2016.

Keep in mind that the company repurchased just over 365K shares of common stock for $33.70 per share, or $12.3M collectively. Consequently, this may have attributed to the company’s strong earnings per share growth year over year.

What You Need to Know About CRMT

  • CRMT reported its fourth quarter and full-year fiscal 2017 financial results, and showed strong earnings growth year over year.
  • America’s Car-Mart reported an adjusted earnings per diluted share of 72 cents, beating the Zacks Consensus Estimate of 64 cents per share.
  • The stock had a 52-week low of $19.49 and a 52-week high of $47.75.
  • As of the close on May 22, 2017, CRMT had a trailing 12-month price-to-earnings ratio of 15.8, while the auto & truck dealerships industry average was 13.8.
    • America’s Car-Mart had a trailing 12-month price-to-sales ratio of 0.50, while the industry average was 0.30.
    • CRMT had a price-to-book ratio of 1.1, while the industry average was 2.9.
  • America’s Car-Mart reported debt-to-equity of 50.6%, compared to the industry average of 170%.
  • CRMT has 7.44M shares floating and a short float of 13.78%.

Check out CRMT on the daily chart:

America's Car-Mart, Inc.

Source: TradingView

Bull Case

CRMT beat its 4Q 2017 earnings estimates, and showed signs of growth in its adjusted diluted EPS figure. When looking at the company’s price-to-book and debt-to-equity ratio, in relation to the industry average, America’s Car-Mart seems more attractive and financially stable.

Bear Case

Some traders may be bearish on the name and look for it to mean revert, after it returned over 50%, while the auto & truck dealerships industry returned just over 18%, over the past year. Additionally, the company is trading at a slightly higher price-to-earnings and price-to-sales than the industry average, which could be an indication that it may be overvalued. Moreover, if you refer to the chart above, CRMT broke below its 20- and 50-day simple moving averages, which some traders may view as bearish, despite the company’s earnings beat.

Last Word

CRMT reported its fourth quarter and full-year fiscal 2017 financial results last night, and shares were up over 5% during the after hours. We’ll have to wait and see how the stock opens up, and what America’s Car-Mart will say in its conference call at 11:00 AM ET today. That said, traders are waiting to hear what the company has to say, and there are reasons why some traders may be bullish or bearish on the stock.

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