I realize I'm starting to sound like a broken record here, but the question has to be asked: Are Warren Buffett and Eddie Lampert really all that? Lampert bought himself a sizeable stake in AutoNation
In short, America's Car-Mart
The downmarket retailer reported Q2 earnings Tuesday, and the stock's up more than 50% since. I'll give you three guesses whether investors liked what they saw:
- Past-due accounts held steady at 3.8% of total loans.
- Charge-offs of bad debt declined 50 basis points year over year.
- Management seems to expect further improvement in this regard, as provision for future bad debts dropped 90 b.p.
- Profits increased 13.8% (to $0.33 per share) on 5.5% sales growth, with 5.3% of that coming from same-store sales.
- Management didn't deign to reveal its cash flow number, but did term it "strong," saying it was able to pay off $4.8 million in debt.
Who's down with OPC?
Meanwhile, as all of Detroit (and Detroit-like cities 'round the world) sinks into a malaise of dwindling new car sales, Car-Mart continues to grow its OPC (Other People's Cars) business. Ford
Car-Mart grew unit sales an otherwise anemic 0.6% in Q2. Still, viewed side-by-side with the numbers coming out of Detroit, that looks like a relative blowout. CEO William Henderson says there's more good news where this came from: "Going forward, contrary to what other auto retailers are forecasting, we believe our sales will continue to increase."
If he's right, if he's not just blowing smoke, then this stock's single-digit P/E looks mighty attractive right about now.
Read along as Car-Mart digs itself out of the ditch it drove into: