America's Car-Mart saw its stock skyrocket Thursday after it posted a strong second quarter with increased profits and revenue that trumped analysts' predictions.
Shares of the buy-here, pay-here used car dealer were up $6.25, or 14 percent, to close at $50.25, in trading on the Nasdaq exchange Thursday. Shares in the company have traded as high as $51.65 and as low as $34.56 over the past year.
The Bentonville-based company reported net income of $7.5 million, or 83 cents per share, for the quarter ended Oct. 31, up 29 percent from $5.8 million, or 61 cents per share, for the same period a year ago. The average of estimates of six analysts predicted earnings of 66 cents per share.
Hank Henderson, president and CEO of Car-Mart, said during a conference call Thursday he was pleased with the growth in sales. And he said the company's focus on providing lower-priced cars is paying off.
"Affordability is what our customers need," he said.
Competition is still fierce, Henderson said, but the company's mix of offerings, including less expensive vehicles with slightly longer terms, seems to be resonating with the company's core customers.
Revenue for the quarter stood at $133.8 million, up 10 percent from $121.4 million for the second quarter of fiscal 2014. The average revenue estimate of three analysts came in at $120.6 million.
This is the second consecutive quarter the company has significantly beaten earnings estimates. The company failed to meet earnings estimates all four quarters of its fiscal 2014.
The company sold 12,084 vehicles in the second quarter, up nearly 14 percent from 10,608 for the same quarter last year. The average sales price of vehicles dropped $220 to $9,490, a little over 2 percent compared with the second quarter of 2014. On average, dealerships sold 29.6 cars per month during the quarter, up from 27.6.
"It's amazing the difference two more sales a month make," Henderson said.
Jeff Williams, the company's chief financial officer, said the sales numbers reflected solid execution on a lot-by-lot basis, with each store pulling its weight. He said the quarter showed a good balance between sales volume and credit risk, adding offering older and less expensive cars is the direction the company needs to continue to take moving forward.
The company bought back 180,525 shares in the second quarter for $7.5 million. Since early 2010, Car-Mart has repurchased 3.5 million shares, about 30 percent of outstanding shares, at the cost of $110.9 million.
Car-Mart operates 136 dealerships in 10 states, adding two in the second quarter. Plans are to open eight stores this fiscal year.
Business on 11/21/2014