America's Car-Mart (CRMT 1.20%) stock tumbled 11.3% through 12:40 p.m. ET Thursday afternoon despite reporting positive fiscal Q4 profits of $1.26 per share on $370.2 million in quarterly sales.
Analysts had only expected the used car service to earn $0.86 per share for the quarter, so you'd think this would be taken as good news -- but investors seem to disagree.
Image source: Getty Images.
America's Car-Mart Q4 earnings
Why is that? Well, quarterly sales were kind of flat, up only 1.5% year over year, despite the volume of cars sold growing 2.6% (so average car prices are coming down). Still, gross profit margins expanded by nearly a full percentage point to 36.4%. And bottom-line profits were $1.26 per share -- versus a $0.06 loss a year ago.
For the full year fiscal 2025, sales declined 0.2% to $1.4 billion on a 1.7% decline in cars sold. Gross margins improved two full percentage points to 36.7%. And earnings were much improved from fiscal 2024 -- $2.33 per share in profit, versus a $4.92 per share loss.
Is America's Car-Mark stock a buy?
All things considered, I'd have to say the business improved a lot in fiscal 2025, and CEO Doug Campbell agrees: "Fiscal year 2025 marked a pivotal period of transformation for our business as we successfully laid much of the groundwork for growth."
Priced at 22 times trailing earnings, and with analysts forecasting fiscal 2026 earnings to be even stronger than what America's Car-Mart just reported, I'm honestly confused why investors are selling off this stock on such good news.
America's Car-Mart is not the "lemon" investors are treating it like today. To me, this small-cap automotive stock looks like a buy.
