Used-car retailer America’s Car-Mart (NASDAQ: CRMT) fell short of the market’s revenue expectations in Q2 CY2025, with sales falling 1.5% year on year to $341.3 million. Its GAAP loss of $0.69 per share was significantly below analysts’ consensus estimates.
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America's Car-Mart (CRMT) Q2 CY2025 Highlights:
- Revenue: $341.3 million vs analyst estimates of $359.2 million (1.5% year-on-year decline, 5% miss)
- EPS (GAAP): -$0.69 vs analyst estimates of $0.83 (significant miss)
- Adjusted EBITDA: $13.93 million vs analyst estimates of $28.19 million (4.1% margin, 50.6% miss)
- Operating Margin: 3.5%, down from 5% in the same quarter last year
- Free Cash Flow was -$6.38 million compared to -$15.96 million in the same quarter last year
- Locations: 154 at quarter end, down from 155 in the same quarter last year
- Same-Store Sales fell 4.1% year on year (-8.6% in the same quarter last year)
- Market Capitalization: $369.6 million
Company Overview
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ: CRMT) sells used cars to budget-conscious consumers.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $1.38 billion in revenue over the past 12 months, America's Car-Mart is a small retailer, which sometimes brings disadvantages compared to larger competitors benefiting from economies of scale and negotiating leverage with suppliers. On the bright side, it can grow faster because it has more white space to build new stores.
As you can see below, America's Car-Mart’s sales grew at a solid 12.7% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) despite not opening many new stores.
This quarter, America's Car-Mart missed Wall Street’s estimates and reported a rather uninspiring 1.5% year-on-year revenue decline, generating $341.3 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 7.3% over the next 12 months, a deceleration versus the last six years. Despite the slowdown, this projection is admirable and indicates the market sees success for its products.
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Store Performance
Number of Stores
The number of stores a retailer operates is a critical driver of how quickly company-level sales can grow.
America's Car-Mart operated 154 locations in the latest quarter, and over the last two years, has kept its store count flat while other consumer retail businesses have opted for growth.
When a retailer keeps its store footprint steady, it usually means demand is stable and it’s focusing on operational efficiency to increase profitability.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.
America's Car-Mart’s demand has been shrinking over the last two years as its same-store sales have averaged 4.2% annual declines. This performance isn’t ideal, and we’d be concerned if America's Car-Mart starts opening new stores to artificially boost revenue growth.
In the latest quarter, America's Car-Mart’s same-store sales fell by 4.1% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from America's Car-Mart’s Q2 Results
We struggled to find many positives in these results. Its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this quarter could have been better. The stock traded down 12.6% to $38.89 immediately after reporting.
The latest quarter from America's Car-Mart’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
