Car-Mart Shares Soar After 1Q Profit Increase

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America’s Car-Mart Inc. posted a 54 percent increase in first-quarter profit that sent share prices up nearly 18 percent Friday morning.

The Bentonville-based used-car dealer, reporting late Thursday, earned $7.1 million, or 87 cents per share, for the quarter that ended July 31, compared to $4.61 million, or 52 cents per share, a year earlier.

The company beat the average earnings estimate of 46 cents per share, according to analysts surveyed by Thomson Reuters.

Revenue, from both sales and interest income, rose 2.2 percent to $145.8 million.

The company focuses on the “buy here, pay here” segment of the used-car market, providing financing for most of its customers. Operating in 11 states in the South and Midwest, Car-Mart opened its 147th dealership Dec. 18 in Milledgeville, Georgia.

The number of cars sold fell 2.3 percent in the quarter, to 11,957 from 12,244 a year earlier.

CEO William H. “Hank” Henderson said in a news release that he was happy to see bottom-line income and top-line revenue increase and positive same-store sales.

“Our top-line growth when excluding the effect of the four dealerships closed in fiscal 2016 was 3.2 percent, which is moving in the right direction for this environment as competition continues to be intense,” Henderson said. “We continue to expect, at some point, that competition will rationalize to a degree which will give us the opportunity to increase sales volume productivity at our older, more mature dealerships.”

Also, the company expects to resume new dealership openings at “a more historical rate at some point in the future.”

In the release, Jeff Williams, president and chief financial officer said, “We are pushing hard to improve execution and lot level blocking and tackling, which is showing up in our results.”

Profit margins and net-charge-offs have improved as a “direct result of intense focus on the overall quality and consistency of our inventory management and our collections practices.”

Car-Mart’s shares were at $36.30, up $3.97 or 12.28 percent, in mid-morning trading on the Nasdaq. Shares have traded between $19.49 and $43.27 in the past year.