America's Car-Mart (CRMT 2.03%) stock turned into a one-car pileup on the Nasdaq freeway on Tuesday as its stock tumbled 17.2% through 2 p.m. ET after reporting a surprise Q2 loss.

Heading into its fiscal Q2 2024, analysts were thinking things were looking pretty good for America's Car-Mart, forecasting a $0.78-per-share profit on sales of $363.7 million. Imagine their surprise when the company just barely missed on sales ($361.6 million), but then reported an eye-popping $4.30 loss for the quarter. 

America's Car-Mart sales and earnings

The news wasn't all bad. Despite missing on sales and selling 4.6% fewer cars in fiscal Q2 2024 than it had sold in fiscal Q2 2023 a year ago, America's Car-Mart still managed to grow its revenue nearly 3% in the quarter. Plus, gross profit margin on sales expanded by 220 basis points to 34.3%.

Regardless, in Q2, America's Car-Mart was forced to write off about 7.2% of its receivables on car loans (versus 5.8% a year ago -- a 24% deterioration in credit quality). And with its customers clearly finding it more difficult to pay their loans in the current economic environment, management decided it needed to raise its "allowance" against future credit losses, resulting in a $3.40-per-share after-tax charge to earnings.

Combined with operational losses, that lifted total net losses to $4.30 per share -- versus a $0.48-per-share quarterly profit a year ago.

Is America's Car-Mart stock a sell?

Suffice it to say, this came as quite a shock to investors, who had been expecting America's Car-Mart to report rising profits in tandem with its rising sales. But as CEO Doug Campbell opined, "the persistent inflationary environment impacted existing customers, which was evident in our credit losses [and] required an increase in the allowance for credit losses."

The good news is that management thinks that inflationary pressures will be "shorter term" in nature, and that the business could get back on track soon. Unfortunately, management didn't give any guidance to back up this hope. Thus, what we're really left with here is a $428 million stock with more than $740 million in net debt, unprofitable and not promising to earn any profits in the near future.

To the contrary, with losses now standing at $3.65 per share through the first half of the year, America's Car-Mart looks very unlikely to achieve Wall Street's consensus forecast of ending fiscal 2024 with a $3.11-per-share profit (as forecast on S&P Global Market Intelligence). And that means, basically, that after reporting a big loss in fiscal Q2, investors can expect only further disappointment as the year progresses.

Much as it pains me to say it, the folks selling America's Car-Mart stock today are probably right.