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Bear Of The Day: Americas CarMart (CRMT)

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Americas CarMart (CRMT - Free Report) is a Zacks Rank #5 (Strong Sell) and today it is the Bear of the Day.  Retail names have been hit hard across the board, but automotive retail names are probably down even more than traditional retail. At the same time, this stock has moved from nearly $130 before the crash to a low of about $40 and is now back to roughly $85.  Let's take a deeper look at CRMT in this Bear of the Day article.

Description

America's Car-Mart operates automotive dealerships and is one of the largest automotive retailers in the United States focused exclusively on the Buy Here/Pay Here segment of the used car market. The Company operates its dealerships primarily in small cities and rural locations throughout the South-Central United States, selling quality used vehicles and providing financing for substantially all of 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.

Earnings History

I see a good earnings history with the company topping the Zacks Consensus Estimate in each of the last four quarters.

Over that time period the average positive earnings surprise is 11%.

That is great to see, but the Zacks Rank cares more about earnings estimate movement.

Estimates Revision

Over the last 60 days, we have seen estimates for CRMT fall in a big way.  I see this quarter dropping from $2.34 to $1.68.  Next quarter slipped from $2.31 to $1.80.

The full year moved from $8.80 to $6.64 and that is what has pushed the stock down to a Zacks Rank #5 (Strong Sell).

Valuation

I see a 12x forward earnings multiple which isn't that high, but it could be a little lower.  10% topline growth is nice to see, but the next report isn't likely to see that much growth.  The price to book at 1.8x is a little rich for a retail name and the 0.7x price to sales multiple is below the 1x number which means the market is not rewarding the company for any incremental sales.

Chart

Americas CarMart, Inc. Price, Consensus and EPS Surprise

Americas CarMart, Inc. Price, Consensus and EPS Surprise

Americas CarMart, Inc. price-consensus-eps-surprise-chart | Americas CarMart, Inc. Quote

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