America’s Car-Mart 3Q Profit Beats Estimates As Sales Jump 22%

Shares of America’s Car-Mart rose 2% on Feb. 16 after the automotive retailer reported strong 3Q results. Its top line was driven by a 16.5% increase in the average sales price and a ~6% increase in the number of units sold.

America’s Car-Mart (CRMT) posted earnings per share (EPS) of $2.85 during the third quarter, which came in ahead of the $2.55 expected by analysts. Revenue increased 22% year-on-year to $228.3 million topping analysts’ estimates of $216.9 million.

SG&A expenses declined to 16.7% of sales during the quarter compared to 18.6% in the comparable year-ago period.

America’s Car-Mart CEO Jeff Williams said, “We believe we are in early stages of transformation from a collections company to more of a sales company that is very good at collections.”

The company is focused on digital push and has begun implementing Microsoft Dynamics 365 which is a full enterprise resource planning tool. This will allow America’s Car-Mart to better manage the complete customer relationship management process. (See America’s Car-Mart stock analysis on TipRanks)

Stephens Analyst Vincent Caintic recently raised the stock’s price target to $154 (12% upside potential) from $128 and reiterated a Buy rating.

Caintic noted that the company’s value proposition has proven itself with both volume and price growth. The analyst believes that a long-term year-on-year topline growth of 10% is achievable.

According to TipRanks’ Smart Score system, America’s Car-Mart gets a 5 out of 10, which indicates that the stock is likely to perform in line with market averages.

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