After barely breaking even last quarter, Wall Street expects America's Car-Mart (NASDAQ:CRMT) to at least show a profit when it reports its fiscal Q4 and year-end earnings Thursday morning. That's the good news. Unfortunately, this profit could be far less than the used-car dealer earned one year ago.

What analysts say:

  • Buy, sell, or waffle? Car-Mart has seating for four analysts: two buyers, and two holders.
  • Revenues. On average, they're looking for sales to inch downward to $62.1 million.
  • Earnings. Profits are predicted to plunge 66% to just $0.13 per share.

What management says:
Investors might rightly be less than pleased with many of Car-Mart's recent statements. Management repeatedly reminds us (for example, in last quarter's earnings release) of how "encouraged" it feels when reviewing the numbers it's producing, and muses aloud about its expectations of profit in the fourth quarter, which will be reported Thursday.

Meanwhile, Janus-like (the Roman god, not the mutual-fund-meister), the company also opines that its "primary goal is to maximize long-term per share results, and management has determined that issuing guidance is inconsistent with this goal." That's an admirable sentiment, reminiscent of the guidance policies of such NYSE stalwarts as 3M (NYSE:MMM), McDonald's (NYSE:MCD), and Coca-Cola (NYSE:KO). But hearing it from the corporate mouthpiece of a Nasdaq-listed pipsqueak staring at a possible two-thirds reduction in quarterly profit does sound a mite self-serving.

What management does:
Not that investors necessarily need any forward guidance to see how Car-Mart's doing. Investors can just as easily use the firm's long-term margin trends to gauge this firm's direction -- namely, downward:

Margins

10/05

1/06

4/06

7/06

10/06

1/07

Gross

30.1%

29.5%

29.4%

29.2%

26.1%

23.5%

Operating

12.8%

12.4%

12.4%

11.9%

8.8%

6.0%

Net

7.5%

7.3%

7.1%

6.7%

4.6%

2.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
If you listen to management, most of the numbers shown above are irrelevant. Car-Mart claims that the future's far more important. Granted, management seems reluctant to describe this future in hard numbers, but it does provide a lot of prose describing how investors should view its current results. For a detailed explanation of the context we're supposed to consider, you can read last quarter's earnings write-up. But I fear that the long and the short of it may go as follows.

If Car-Mart appears to be growing slowly in any given quarter, management will say it's simply busy "maximizing long-term per share results" -- in other words, making darned sure the cars it sells will go to buyers who can pay for them. On the other hand, if Car-Mart grows quickly, it won't owe to a return to past mistakes of extending credit willy-nilly. Instead, it will merely be proof that management has succeeded in resuscitating the business.

I suspect that the game Car-Mart's asking us to play is "Heads, I win; tails, I can't lose."

What did we expect out of Car-Mart last quarter, and what did it produce? Find out in:

Fool contributor Rich Smith does not own shares of any company named above. 3M and Coca-Cola are Motley Fool Inside Value recommendations. The Fool's disclosure policy includes leather upholstery and a power moon roof.