Analysts: Car-Mart Q1 profit to rise, revenue to fall

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by Jeff Della Rosa ([email protected]) ago 0 views 

Rogers-based America’s Car-Mart Inc. is expected to post mixed results in the first quarter of fiscal 2025 as vehicle sales fall and sales price growth moderates, analysts said.

Before the markets open Wednesday (Sept. 4), Car-Mart is expected to report earnings increased to 66 cents per share in the quarter ending July 31 from 63 cents per share in the same period last year, based on a consensus of four analysts. Revenue is projected to fall by 7.9% to $338.78 million from $368.02 million.

In an earnings preview, equity analysts John Hecht, Matthew Hurwit and Derek Sommers and equity associates Ibrahim Kargbo and Alexander Villalobos, all of Jefferies, expect “further headwinds” to vehicle sales while sales price growth moderates but remains positive. They expect vehicle sales to fall by 11% and sales prices to rise by 2% in the first quarter compared to the same period last year.

The analysts said Car-Mart’s recent initiatives should benefit its efficiency regarding operating expenses.

“Credit remains the wildcard,” they said. “But we note improving 30-day (delinquency) trends and improved down payment percentage on new originations.”

According to the analysts, Car-Mart’s gross margin is projected to fall to 32.3% in the first quarter from 32.6% in the fourth quarter of fiscal 2024. Car-Mart has 156 stores, up two from the fourth quarter. This includes the integration of Texas Auto Center.

“While Car-Mart is still facing headwinds present in the broader auto industry, we note the company is now on the other side of the investing/implementation phase of several key initiatives, including new (loan origination system) implementation, (enterprise resource planning) implementation and Cox Automotive partnership. These initiatives should somewhat mitigate broader autos headwinds. We keep our eyes on loss rates, 30-day (delinquency) rates and (average) originating term to influence our thinking on credit.”

Jefferies analysts have a hold rating on Car-Mart stock and a target price of $68.

Shares of Car-Mart (NASDAQ: CRMT) closed Friday (Aug. 30) at $60.53, down 16 cents or 0.26%. In the past 52 weeks, the stock has ranged between $55 and $113.73.