America’s Car-Mart (CRMT) Q2 2019 Earnings Prep

in INVESTING IDEAS by

America’s Car-Mart, Inc. (NASDAQGS:CRMT) is scheduled to report Q2 earnings results on November 18, 2019, after market close. The company is expected to report earnings of $1.80/share on revenue of $173.3 million. The consensus earnings per share (EPS) of $1.80/share is based on a poll of 3 analysts and represents a growth of 20.0% over the same quarter last year when the company reported earnings of $1.50/share.

The revenue forecast of $173.3 million based on a poll of 4 analysts implies a year-over-year (YoY) growth of 3.7%. Last year the company reported $167.2 million in revenue for the quarter.

Expected to report EPS growth of $0.30/share for Q2, 2019
Metric Expected Prior Year YoY Change
Revenue $173.35 $167.17 3.7%
EPS $1.80 $1.50 20.0%

In the company’s last investor presentation, management outlined the following future goals:

  • Continue to grow store count: Add dealerships selectively in good, solid communities
  • Increase Unit Sales Volumes: Increase customer count and market share per location
  • Cash-on-Cash Returns: Continue to focus on lot – specific fully-loaded economic profit goals
  • Solid Infrastructure: Continue to invest in support for higher sales and receivable volumes

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q1, 2020 $1.70 $1.88 10.6% Beat
Q4, 2019 $1.82 $2.01 10.4% Beat
Q3, 2019 $1.02 $1.55 52.0% Beat
Q2, 2019 $1.20 $1.50 25.0% Beat
Q1, 2019 $1.09 $1.40 28.4% Beat
Q4, 2018 $1.09 $1.31 20.2% Beat
Q3, 2018 $0.54 $0.60 12.1% Beat
Q2, 2018 $0.75 $0.79 5.3% Beat

What are your expectations from America’s Car-Mart for this quarter? Let us know in the comments!

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 31, 2019, the stock price reacted by increasing by 3.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-15 $88.85 $92 3.5% Increase
2019-05-21 $100 $91.34 -8.7% Decline
2019-02-19 $82.14 $84.91 3.4% Increase
2018-11-15 $72.17 $83.98 16.4% Increase

Fundamentals And Technical Analysis

America’s Car-Mart is currently trading at $87.66/share, up 2.2% for the day. The company is trading at approximately 84% of its 52-week high of $104.05/share. The company’s 14 Day Relative Price Index (RSI) of 35.30 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 11.0x and a forward P/E multiple of 10.9x.

America’s Car-Mart’s current share price also implies a price-to-book (P/B) multiple of 2.1x. The following table summarizes some other key fundamental ratios:

Data as of November 17, 2019
Metric Value
Last Fiscal Period FY2020.Q1
Period End Date July 31, 2019
Stock Price (Current) $87.66
P/E Ratio 11.0x
P/E Ratio (Fwd) 10.9x
PEG Ratio -4.6
Total Debt to Capital (%) 25.6%
Levered Free Cash Flow $18.042 million
Enterprise Value / EBITDA 9.8x

Company Profile: America’s Car-Mart, Inc.

America’s Car-Mart, Inc. is a small-cap stock with a market capitalization of $583.7 million and a total enterprise value of $780.9 million. The company operates in the Consumer Discretionary sector and Specialty Retail industry.

America’s Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer in the United States. The company primarily sells older model used vehicles and provides financing for its customers. As of May 21, 2019, it operated 144 dealerships. America’s Car-Mart, Inc. was founded in 1981 and is based in Bentonville, Arkansas.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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