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1. Company Snapshot

1.a. Company Description

America's Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer in the United States.It primarily sells older model used vehicles and provides financing for its customers.As of April 30, 2022, the company operated 154 dealerships in the South-Central United States.


The company was founded in 1981 and is based in Rogers, Arkansas.

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1.b. Last Insights on CRMT

Recent negative drivers behind America's Car-Mart's performance include a 4-week decline of 15.1% and a period of oversold conditions, which may indicate exhaustion of selling pressure. However, strong earnings estimates revisions and a potential trend reversal are underway, driven by the company's improved loan metrics, 36.5% gross margin, and successful ABS transaction. Additionally, management's focus on improving liquidity and a centralized LOS system are key drivers of growth.

1.c. Company Highlights

2. America's Car-Mart Q1 FY2026 Earnings Update: Mixed Results Amidst Operational Challenges

Revenue for America's Car-Mart came in at $341.3M, down 1.9% YoY due to fewer retail units sold, though this was partially offset by a 7.5% increase in interest income. Gross margin expanded to 36.6%, and collections grew by 6.2% to $183.6M. However, SG&A expenses rose 10.1% to $51.4M, driven by payroll and technology investments, including the implementation of LOS V2 and Pay Your Way platforms. The company reported an EPS of -$0.69, missing estimates of $0.69. The current P/S Ratio of 0.28 indicates the market's expectation of the company's growth prospects.

Publication Date: Sep -08

📋 Highlights
  • SG&A Expenses: Increased due to accelerated investments, with 50% expected to unwind in H2; target mid-16% SG&A ratio, including 5% cost savings from Pay Your Way modernization.
  • Tariff Impact: Inventory prices rose 5-6% YoY, but H2 seasonal declines are anticipated despite ongoing cost pressures.
  • ABL Constraints: 30% advance rate and $30M cap under ABL limit working capital flexibility, requiring optimization to access ABS markets.
  • LOS V2 Implementation: Now covers 72% of the portfolio, improving risk scoring and tiered pricing, attracting higher-credit-profile applicants.
  • Delinquency Trends: 30-day delinquencies peaked at 3.6% due to payment system transitions but normalized to 2.8% by August, within historical ranges.

Operational Highlights and Challenges

The company faced challenges such as tariffs, which increased procurement costs by $500 per unit, and inventory constraints. However, LOS V2 and risk-based pricing have shown positive results, shifting 15% more volume to top-tier customers and improving returns. Credit applications surged 26.5% YoY in July, driven by marketing efforts and macro trends. The company is working on expanding its inventory capacity and optimizing its capital structure.

Credit Metrics and Securitization

Net charge-offs slightly increased to 6.6%, but the allowance for credit losses improved. The company successfully completed securitizations at lower interest rates, with the 2025-3 securitization achieving a rate of 5.46%, a 308 bps reduction since 2024-1. Debt-to-receivables ratios improved to 51.1% and 43.1%. The company's focus on quality underwriting, digital payment adoption, and capital structure optimization is expected to drive future growth.

Valuation and Future Outlook

With a current ROE of 2.17% and ROIC of 82.11%, the company's profitability metrics indicate a mixed performance. The EV/EBITDA ratio of 3.07 suggests a relatively low valuation. As the company navigates operational challenges and focuses on strategic priorities, investors will be watching for improvements in credit metrics and inventory capacity expansion. The market's expectation of the company's growth prospects will be reflected in its valuation multiples.

3. NewsRoom

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America's Car-Mart, Inc. (CRMT) Q2 2026 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

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America's Car-Mart Reports Second Quarter Fiscal Year 2026 Results

Dec -04

Source: globenewswire.com

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CRMT Investor News: If You Have Suffered Losses in America's Car-Mart, Inc. (NASDAQ: CRMT), You Are Encouraged to Contact The Rosen Law Firm About Your Rights

Dec -03

Source: globenewswire.com

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ROSEN, A TOP-RANKED LAW FIRM, Encourages America's Car-Mart, Inc. Investors to Inquire About Securities Class Action Investigation - CRMT

Dec -03

Source: newsfilecorp.com

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ROSEN, A TOP-RANKED LAW FIRM, Encourages America's Car-Mart, Inc. Investors to Inquire About Securities Class Action Investigation - CRMT

Dec -02

Source: newsfilecorp.com

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CRMT Investor News: If You Have Suffered Losses in America’s Car-Mart, Inc. (NASDAQ: CRMT), You Are Encouraged to Contact The Rosen Law Firm About Your Rights

Nov -30

Source: globenewswire.com

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Rosen Law Firm Encourages America's Car-Mart, Inc. Investors with Losses in Excess of $100K to Inquire About Securities Class Action Investigation - CRMT

Nov -29

Source: prnewswire.com

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ROSEN, GLOBAL INVESTOR COUNSEL, Encourages America's Car-Mart, Inc. Investors to Inquire About Securities Class Action Investigation - CRMT

Nov -28

Source: newsfilecorp.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.50%)

6. Segments

Used Autos

Expected Growth: 7.43%

Used Autos from America's Car-Mart, Inc. growth driven by increasing demand for affordable vehicles, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on providing financing options to subprime customers and its 'buy-here, pay-here' model have contributed to its 7.43% growth.

Wholesales

Expected Growth: 7.4%

America's Car-Mart, Inc.'s 7.4% wholesale growth is driven by increasing demand for used vehicles, expansion into new markets, and strategic partnerships with dealerships. Additionally, the company's focus on providing affordable financing options and its 'no-haggle' pricing strategy have contributed to its growth. Furthermore, the rise of online car buying platforms has also boosted wholesale sales.

Service Contract

Expected Growth: 8.33%

America's Car-Mart, Inc.'s 8.33% growth in Service Contracts is driven by increasing demand for affordable used vehicles, expansion of financing options, and a growing customer base. Additionally, the company's focus on customer service, competitive pricing, and strategic store locations contribute to the growth. Furthermore, the rise of online sales and digital marketing efforts also support the segment's growth.

Accident Protection Plan

Expected Growth: 8.37%

The 8.37% growth of Accident Protection Plan from America's Car-Mart, Inc. is driven by increasing demand for vehicle service contracts, expansion into new markets, and a growing customer base seeking financial protection against unexpected vehicle repairs. Additionally, the company's focus on customer retention and loyalty programs contributes to the growth.

7. Detailed Products

Used Vehicles

America's Car-Mart, Inc. sells a wide range of used vehicles, including cars, trucks, vans, and SUVs, from various manufacturers.

Financing Options

The company offers financing options to customers, including in-house financing and third-party financing, to help them purchase vehicles.

Warranty and Service Contracts

America's Car-Mart, Inc. offers warranty and service contracts to provide customers with protection and maintenance for their vehicles.

Insurance Products

The company offers insurance products, such as GAP insurance and service contracts, to provide customers with additional protection.

8. America's Car-Mart, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Car-Mart's business model is focused on providing used vehicles to subprime customers, which reduces the threat of substitutes. Additionally, the company's focus on providing financing options to customers also reduces the threat of substitutes.

Bargaining Power Of Customers

Car-Mart's customers have some bargaining power due to the availability of alternative used car dealerships. However, the company's focus on providing financing options and its large inventory of vehicles reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Car-Mart has a large network of suppliers, which reduces the bargaining power of individual suppliers. The company's scale of operations also gives it negotiating power with suppliers.

Threat Of New Entrants

The used car market has high barriers to entry, including the need for significant capital to purchase inventory and establish a dealership network. This reduces the threat of new entrants.

Intensity Of Rivalry

The used car market is highly competitive, with many dealerships competing for customers. Car-Mart's focus on providing financing options and its large inventory of vehicles help it to differentiate itself from competitors, but the intensity of rivalry remains high.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 81.83%
Debt Cost 7.57%
Equity Weight 18.17%
Equity Cost 12.31%
WACC 8.43%
Leverage 450.37%

11. Quality Control: America's Car-Mart, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Kingsway Financial Services

A-Score: 4.6/10

Value: 4.6

Growth: 4.2

Quality: 3.7

Yield: 0.0

Momentum: 9.5

Volatility: 5.7

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Driven Brands

A-Score: 4.5/10

Value: 6.0

Growth: 5.3

Quality: 3.0

Yield: 0.0

Momentum: 7.0

Volatility: 5.7

1-Year Total Return ->

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Cars

A-Score: 4.3/10

Value: 7.2

Growth: 5.4

Quality: 6.3

Yield: 0.0

Momentum: 2.5

Volatility: 4.3

1-Year Total Return ->

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Vroom

A-Score: 3.6/10

Value: 8.2

Growth: 4.6

Quality: 4.0

Yield: 0.0

Momentum: 5.0

Volatility: 0.0

1-Year Total Return ->

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America's Car-Mart

A-Score: 3.6/10

Value: 8.7

Growth: 3.6

Quality: 5.4

Yield: 0.0

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

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RumbleON

A-Score: 3.3/10

Value: 8.0

Growth: 5.2

Quality: 2.9

Yield: 0.0

Momentum: 3.0

Volatility: 1.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

26.06$

Current Price

26.06$

Potential

-0.00%

Expected Cash-Flows