What Happened?

Shares of used-car retailer America’s Car-Mart (NASDAQ:CRMT) jumped 19.5% in the morning session after the company reported impressive third-quarter earnings, which blew past analysts' revenue, EPS, and EBITDA expectations. On the other hand, its gross margin missed. Still, we think this was a solid quarter.

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What The Market Is Telling Us

America's Car-Mart’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for America's Car-Mart and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock dropped 8.4% on the news that the company reported first-quarter earnings with gross margin and EPS missing Wall Street's estimates. While revenue came in slightly ahead of Wall Street's estimates, top line sales growth declined year on year. The weak top line was driven by a decrease in retail units sold. Retail units sold came in at 15,251 (down 13.6%). Management cited macro challenges, adding "the persistent inflationary environment driven by macro trends disproportionately impacted our customer base." Overall, this was a bad quarter for America's Car-Mart.

America's Car-Mart is down 21.9% since the beginning of the year, and at $53.87 per share, it is trading 34.8% below its 52-week high of $82.65 from December 2023. Investors who bought $1,000 worth of America's Car-Mart’s shares 5 years ago would now be looking at an investment worth $512.99.

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