Reports of the used car market's difficulties were well documented, but might have merely been a sign of the times. By the looks of America's Car-Mart's (NASDAQ:CRMT) earnings release, the auto sales segment still has a bit of spark left in its engine.

Car-Mart said its FY2004 fourth-quarter earnings were $0.58 per share, a good three cents better than the consensus estimate and 10 cents better than last year's number. The company's sales were up 13%, although the target was slightly below Wall Street expectations. Nonetheless, sales were primarily bolstered by a $400 increase in the average retail sales price, a result of cutting out the sale of lower-priced vehicles.

The company's balance sheet is much stronger than last year, as it has reduced debt levels at fiscal year-end by $3 million (to $23 million). As a result of this additional financial flexibility, the used car retailer plans to open eight new dealerships this fiscal year in addition to the net of six it opened last year.

Looking to the future, the dealer expects to drive earnings up to a range of $0.57 to $0.60 in the FY2005 first quarter, versus a consensus target of $0.58, and earn $2.22 to $2.34 for the full year (the analysts expect $2.32 earnings per share).

While many companies such as AutoNation (NYSE:AN), CarMax (NYSE:KMX), Pep Boys (NYSE:PBY), and AutoZone (NYSE:AZO) have fretted about rising gas prices over the past three months, it appears these concerns have calmed somewhat. Many car-related companies have, so far, plowed right through OPEC's Summer of Gouging and kept the motor revving.

With America's Car-Mart stock trading at about 13 times next year's earnings per share estimate, the shares appear to be undervalued when compared to a nearly 20% EPS growth rate expected over the next five years. As the company continues to expand its successful used car platform, I also expect the company's results to inflate even more.

Fool contributor Phil Wohl spent more than 12 years on Wall Street and now concentrates his writing on more fictional characters. He has no stake in any firm mentioned above.