Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.
America’s Car-Mart (NASDAQ: CRMT) has announced its financial results for the fourth quarter and the full fiscal year ending April 30, 2024. The company reported revenue of $364.7 million for the quarter, marking a 5.8% decline compared to the same period last year. Despite the dip in revenue, the gross margin improved to 35.5%, up by 200 basis points. Total collections also saw a positive trend, increasing by 5.0% to $187.2 million. Additionally, the company made a favorable adjustment to its allowance for credit loss, reducing it to 25.32% from 25.74%.
However, not all metrics painted a rosy picture. Net charge-offs as a percentage of average finance receivables rose to 7.3% compared to 6.3% in the previous year. Interest expenses also saw a significant increase, climbing by $4.9 million, or 38.2%. The quarter’s diluted earnings per share (EPS) stood at $0.06, a sharp decline from the $0.32 reported in the same quarter last year. This EPS decline is a concern for investors and market analysts alike.
CRMT Misses EPS and Revenue Expectations in Q4
When comparing the current quarter’s performance against market expectations, America’s Car-Mart fell short. Analysts had projected an EPS of $0.063, but the actual EPS came in slightly lower at $0.06. While this might seem like a minor discrepancy, it underscores the challenges the company is facing. Revenue expectations were pegged at $364.86 million, and the actual revenue of $364.7 million missed this target by a small margin. Although the shortfall in revenue is minimal, it still highlights the company’s struggle to meet market expectations.
The improvement in gross margin and total collections could be seen as positive signs, but they were not enough to offset the increased interest expenses and higher net charge-offs. These factors collectively contributed to the lower-than-expected EPS. The company’s ability to manage its finance receivables and control interest expenses will be crucial in the coming quarters to meet or exceed market expectations.
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America’s Car-Mart Focused on Improving Credit Loss Allowance Further
Looking ahead, America’s Car-Mart has provided guidance that aims to address some of the issues highlighted in the current quarter’s performance. The company plans to focus on improving its credit loss allowance further and managing its interest expenses more effectively. These steps are expected to enhance the overall financial health of the company and provide a more stable foundation for future growth.
Additionally, the company has indicated that it will continue to work on improving its gross margin and total collections. These areas have shown positive trends in the current quarter, and sustained focus on them could yield better financial results in the upcoming quarters. The management’s strategy will likely involve a combination of cost-cutting measures and revenue-enhancing initiatives to achieve these goals.
Disclaimer: The author does not hold or have a position in any securities discussed in the article.
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