For investors with a long-term horizon, assessing earnings trend over time and against industry benchmarks is more valuable than looking at a single earnings announcement in one point in time. Investors may find my commentary, albeit very high-level and brief, on America's Car-Mart, Inc. (NasdaqGS:CRMT) useful as an attempt to give more color around how America's Car-Mart is currently performing.
Commentary On CRMT's Past Performance
CRMT's trailing twelve-month earnings (from 31 July 2019) of US$52m has jumped 29% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 20%, indicating the rate at which CRMT is growing has accelerated. How has it been able to do this? Let's take a look at whether it is solely due to industry tailwinds, or if America's Car-Mart has seen some company-specific growth.
In terms of returns from investment, America's Car-Mart has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 11% exceeds the US Specialty Retail industry of 5.6%, indicating America's Car-Mart has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for America's Car-Mart’s debt level, has increased over the past 3 years from 6.8% to 14%.
What does this mean?
Though America's Car-Mart's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research America's Car-Mart to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CRMT’s future growth? Take a look at our free research report of analyst consensus for CRMT’s outlook.
- Financial Health: Are CRMT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 July 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.