Does America’s Car-Mart Inc’s (NASDAQ:CRMT) Recent Track Record Look Strong?
After looking at America’s Car-Mart Inc’s (NASDAQ:CRMT) latest earnings announcement (31 October 2017), I found it useful to revisit the company’s performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. See our latest analysis for America’s Car-Mart
How Well Did CRMT Perform?
I like to use data from the most recent 12 months, which annualizes the latest 6-month earnings release, or some times, the latest annual report is already the most recent financial data. This technique allows me to examine many different companies on a more comparable basis, using the latest information. “For America’s Car-Mart, its “, latest earnings is $21.0M, which, against the prior year’s figure, has risen by a relatively unexciting 7.41%. Since these values may be fairly myopic, I have estimated an annualized five-year figure for America’s Car-Mart’s earnings, which stands at $25.1M. This suggests that, even though earnings increased from last year’s level, over the past couple of years, America’s Car-Mart’s earnings have been falling on average.
Why is this? Let’s examine what’s going on with margins and whether the rest of the industry is feeling the heat. Revenue growth over the past few years, has been positive, however earnings growth has been falling. This implies that America’s Car-Mart has been ramping up expenses, which is harming margins and earnings, and is not a sustainable practice. Inspecting growth from a sector-level, the US specialty retail industry has been growing, albeit, at a unexciting single-digit rate of 8.14% over the past twelve months, and 5.98% over the past five years. This means that any tailwind the industry is benefiting from, America’s Car-Mart has not been able to gain as much as its average peer.
What does this mean?
America’s Car-Mart’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be factors that are affecting the entire industry thus the high industry growth rate over the same time period. I suggest you continue to research America’s Car-Mart to get a better picture of the stock by looking at:
1. 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.
2. Financial Health: Is 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.
3. 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 last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
