Q2 Earnings Highs And Lows: America's Car-Mart (NASDAQ:CRMT) Vs The Rest Of The Vehicle Retailer Stocks
As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q2. Today we are looking at the vehicle retailer stocks, starting with America's Car-Mart (NASDAQ:CRMT).
Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.
The 4 vehicle retailer stocks we track reported a weaker Q2; on average, revenues beat analyst consensus estimates by 0.57%, Tech multiples have reverted to the historical mean after reaching all time levels in early 2021 and vehicle retailer stocks have not been spared, with share prices down 14.6% since the previous earnings results, on average.
America's Car-Mart (NASDAQ:CRMT)
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
America's Car-Mart reported revenues of $368 million, up 9.27% year on year, beating analyst expectations by 1.15%. It was a weak quarter for the company, with retail units sold missing analysts' expectations, but revenue beat. In addition, EPS missed by a large margin because provision for credit losses and net charge offs were both meaningfully higher this quarter than in the same period last year.
“In the first quarter, improvements in many areas of the business - unit sales, gross margin, repair costs, diminishing wholesale losses, online credit application activity, working capital management and closing underperforming stores were overshadowed by the increase in the provision for loan losses during the period. The major drivers behind higher loan losses related to post-stimulus normalization of charge-offs, additional provisioning resulting from increased contract term, and a higher average interest rate for the portfolio. Said in a different way, we are experiencing the same credit results on the portfolio as we have historically, but the contract length has changed,” commented CEO Jeff Williams.
The stock is down 20.9% since the results and currently trades at $89.85.
Best Q2: CarMax (NYSE:KMX)
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States.
CarMax reported revenues of $7.69 billion, down 20.4% year on year, beating analyst expectations by 2.29%. It was a decent quarter for the company, with optimistic earnings guidance for the next quarter. However, the correction in the used car market caused same-store sales to drag, leading to declining revenue.
CarMax had the slowest revenue growth among its peers. The stock is down 1.78% since the results and currently trades at $76.9.
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Weakest Q2: Camping World (NYSE:CWH)
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Camping World reported revenues of $1.9 billion, down 12.4% year on year, missing analyst expectations by 3.54%. It was a weak quarter for the company, with revenue missing analysts' expectations, starting with a meaningful same-store sales miss. The company also missed Wall Street's EPS expectations.
Camping World had the weakest performance against analyst estimates in the group. The stock is down 36.2% since the results and currently trades at $19.95.
With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Lithia reported revenues of $8.11 billion, up 12% year on year, beating analyst expectations by 2.37%. It was a decent quarter for the company, with a solid beat of analysts' revenue and EPS estimates.
Lithia achieved the strongest analyst estimates beat and fastest revenue growth among the peers. The stock is up 0.36% since the results and currently trades at $293.43.
The author has no position in any of the stocks mentioned