Why America's Car-Mart Shares Jumped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of America's Car-Mart were cruising higher today, gaining as much as 13% after beating earnings estimates this morning.

So what: The automotive retailer posted earnings per share of $0.84, $0.10 better than the consensus, and said revenues grew 12.8% to $118.9 million, topping expectations by more than 10%. EPS increased 15% from a year ago, and unit sales and sales per store both improved significantly. Management credited the store managers' focus on repeat business as well as other tactics for the company's strong performance in the quarter.

Now what: At a time when the average car on the road in the US is 11 years old, demand in the auto market seems bound to improve. Automakers like GM and Ford have had robust sales in North America lately, and the used car market, America's Car-Mart's specialty, seems just as likely to grow. The company also opened three new dealerships in the quarter, bringing its grand total to 120. Analysts seem to be underestimating the growth potential her, and I'd expect to see estimates revised upwards soon. At today's prices, America's Car-Mart shares look like a good value.

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The article Why America's Car-Mart Shares Jumped originally appeared on Fool.com.

Fool contributor Jeremy Bowman and The Motley Fool have no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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