America's Car Mart Earnings Release $CRMT
A correspondent writes in about the America's Car Mart earnings release,
So much for Moody’s contention that the subprime guys are getting tougher on terms. They are doing the right thing by not getting down and dirty with the subprime guys, but they are getting hit on volume and negative operating leverage. Stock down 14% after hours. Comps down 10%, units per store down 8.5%. Net charge offs up 120BP vs 100 last quarter. Average down payment % was up 100BP y/y. Looks like their average term must be up little given the collection percentage.
"We remain committed to continuing to grow our dealership count into the future, but given the current market dynamics we will be even more selective as we move forward. Being more selective, we will likely see new dealership openings for this upcoming year at less than our recent 10% rate….We accomplished all this in a year that could be considered the most difficult in the Company's history from both a macroeconomic standpoint for our customers coupled with the extremely competitive environment on the financing side. We believe that our customers have never been more stressed financially and, at the same time, have never been presented with more aggressive financing options for their vehicles," said Jeff Williams, Chief Financial Officer of America's Car-Mart. "We had been optimistic that interest rates may rise and give us some relief on the competitive side by potentially re-directing some money in search of yield. That has not happened so we continue to focus our energies on those things we can control and where we can make a difference."
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Carmax, KMX, traded lower today, distinguishing itself as a loss leader amongst its peers and among Small Cap Pure Value Stocks, RZV, as is seen in the ongoing Yahoo Finance Chart of PAG, SAH, ABG, KAR, AN, LAD, and KMX http://tinyurl.com/kn9cm6m
The auto dealers as a group have been the very definition of risk-on investing as well as the definition of the investor, not employment, not economic renaissance, as the centerpiece of economic recovery. Clearly the investor was brought to the forefront of economic action by the US Fed’s monetary policies and schemes of credit stimulus. The economy existed for the investor, and for the purpose of developing a moral hazard based prosperity. Spectacular investment results came to those who understood that Ben Bernanke’s Cool Aid would be the Juice of Juice and the Elixir of Stock Jockeys.
The chart of the Small Cap Pure Value Stocks, RZV, shows these credit intensive stocks in the middle of a broadening top candlestick pattern; of which Stress Authority relates, When you see the broadening top, the market will eventually drop. All I can say is look out below!
Now with destructionism replacing inflationism, the debt serf will become the centerpiece of economic action; and all economic resources will be centered upon him.
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