Car-Mart expected to post 2Q loss, revenue decline

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

Rogers-based America’s Car-Mart Inc. is expected to post a loss in the second quarter of fiscal 2025 as vehicle sales decrease and prices become more stable. Analysts projected the loss to be much less than it was in the same period last year.

Before the markets open Thursday (Dec. 5), Car-Mart is expected to report a 10 cents per share loss for the quarter ending Oct. 31, much better than a loss of $4.30 per share in the same period last year, based on a consensus of five analysts. Revenue is projected to fall by 4.76% to $344.37 million from $361.58 million.

In an earnings preview, equity analysts John Hecht and Matthew Hurwit and equity associates Alexander Villalobos and Ibrahim Kargbo, all of Jefferies, expect vehicle sales to decline by 6% to about 14,300 vehicles in the second quarter from the same period last year. This is down from the 10% year-over-year decline reported in the first quarter of fiscal 2025.

Analysts said the average vehicle sales price is projected to fall about 1% in the second quarter from the same period last year “as price changes have moderated in recent quarters and affordability challenges percolate among (Car-Mart’s) core customer base.”

Loss rates are expected to improve slightly “as the back-book underwritten on the company’s old (loan origination system) continues to run off,” analysts said. “Credit performance among loans originated on the new (loan origination system) has been materially improved.”

Second-quarter gross margins are expected to improve to 36.4% from 34.3% in the same period last year. Analysts attributed this to “stabilizing auto prices and procurement improvements driven by the Cox Automotive partnership. Our projected level of gross margin is still meaningfully below long-term historical averages.”

Jefferies analysts maintained a hold rating for Car-Mart and a 12-month target of $45 per share.

Shares of Car-Mart (NASDAQ: CRMT) closed Monday (Dec. 2) at $45.86, down 30 cents. Over the past 52 weeks, the stock has ranged between $37.98 and $83.07.