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USED CARS
My little sister's in the front seat with an ice cream cone
My ma's in the black seat sittin' all alone
As my pa steers her slow out of the lot for a test drive down Michigan Avenue
Now, my ma, she fingers her wedding band
And watches the salesman stare at my old man's hands
He's tellin' us all 'bout the break he'd give us if he could, but he just can't
Well if I could, I swear I know just what I'd do
Now, mister, the day the lottery I win I ain't ever gonna ride in no used car again
Now, the neighbors come from near and far
As we pull up in our brand new used car
I wish he'd just hit the gas and let out a cry and tell 'em all they can kiss our asses goodbye
My dad, he sweats the same job from mornin' to morn
Me, I walk home on the same dirty streets where I was born
Up the block I can hear my little sister in the front seat blowin' that horn
The sounds echoin' all down Michigan Avenue
Now, mister, the day my numbers comes in I ain't ever gonna ride in no used car again
Now everyone who knows me knows that I am a HUGE Bruce Springsteen fan. Even better, he’s already back on tour and I’m going to see him with Austin in Philly next week and then in the Meadowlands the following week and once again in Newark in May. But there is a clear difference of opinion that I have with Mr. Springsteen. In his song, “Used Cars” from the underrated Nebraska album, Springsteen reflects on the sorrow and melancholy he experienced when he rode home in his brand new used car.
Well, $$$MR. MARKET$$$ loves buying used cars. I mean, why buy a new car when you can have 3 used cars for the same price? I mean, a new car is a used car the minute you drive it off the dealer lot.
That’s why I bought America's Car-Mart, Inc. (CRMT) today at $44.99 per share. I will sell it in 4 to 6 weeks at 51.93. Here’s why I like CRMT:
Well, first of all, look at the darn chart!
This stock is up 88% off of its 52 week low and its PE is only 14.7. Yea…you got it. This is an amazing growth stock that is as cheap as a brand new used car. That’s right baby…you have quarterly revenue growth of 14% on top of quarterly earnings growth of 28%. Used cars are cool. You have to buy a used car. Where are you going to get a new car anyway? Detroit??? GM is bankrupt. Why buy a new Accord when you can buy 2 used caddy’s for the same price? Why buy a new SUV when you can buy 2 used Chrysler Town and Countrys that Trevor can take to college and let his friends drive to Turkey Hill to buy ice cream and what not. I mean, who cares when he brings the car back from college and it smells like gak? It’s a used car.
America’s Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer in the United States. It primarily sells older model used vehicles and provides financing for its customers. As of February 3, 2012, the company operated 112 automotive dealerships in 9 states. The company was founded in 1981 and is based in Bentonville, Arkansas. It is the nation’s largest publicly held automotive retailer focused exclusively on the “Integrated Auto Sales and Finance” segment. Focus is on cultivating relationships and earning repeat business.
They have been successful primarily because their competition sucks. In a fragmented Industry – competition is made up of smaller “mom-and-pop” dealers lacking Car-Mart’s strengths in:
• Marketing / Branding
• Central Oversight
• Information Technology
• Purchasing
• Solid Financial Position
• Experienced Management Team
There are other companies who try to mimic CRMT’s strategy, but they miss the boat. AutoNation and CarMax, have faced difficulty in moving trucks and sport utility vehicles off their lots, due to changing consumer buying patterns and/or restricted access in obtaining auto financing, Car-Mart has success in selling basic and affordable transportation. With stubborn unemployment prevailing, Car-Mart's decision to not focus on luxury or sports cars is paying off. The average car sold was between three and ten years of age with 80,000 to 130,000 miles on the odometer.
Lending money to sub-prime borrowers is risky, yes but Car-Mart has a decentralized business strategy, with each dealership responsible for making customer credit decisions and collecting on the loans it originates. And, substantially all associate incentive compensation is tied directly -- or indirectly -- to collection results. So the proprietors are incentivised to be wise bankers as well as cracker jack sales people. This becomes apparent if you review the credit losses which, on a percentage basis, tend to be higher at new and developing stores (under six years of age), for those dealerships tend to have more inexperienced managers (in making credit decisions and collecting on customer loans) and less repeat (reliable) customers.
Revenues have grown each and every year for over 12 years. That means they’ve gone through 2 recessions and still grow their business. Sounds like a good business plan to me. Or maybe it’s the recessions that increased their growth….hmmmm. They’ve grown their customer base in 10 years from 18,000 people to 53,000 customers. Remember, once someone gets the used car bug, they are repeat customers (like me).
Look at these satisfied customers:
Brian and Susan Lewis - CAR-MART of Rogers and Tuscaloosa Customers
"We have purchased 9 vehicles from Car-Mart. We bought our first one from CAR-MART of Rogers, AR and continued to buy from them for many years. Even when we moved to New Mexico, we drove 12 hours to go back there because we knew we could trust the staff. Now that we have moved to Georgia, we shortened our trip and drove 4 hours to the Tuscaloosa, AL lot where we were again treated like family. CAR-MART should teach other dealers on how to do business. They always listen to us, and that is wildly important."
Brian and Susan Lewis
The other way that CRMT makes money is through the financing of purchases for their customer base. Since credit has tightened up considerably after the most recent bank bust, CRMT has greased their earnings by greasing the palms of its customers with some car loans that provide significant returns (14.7% interest rates..nice!) on the company’s capital base. On top of all that, the average sales price of the vehicles has increased from $9400 to $9900. That’s a 5% revenue kick without even selling an additional vehicle! The average profit per vehicle is approximately $1400. So they are making a 14% margin on used inventory. They don’t even have to make the cars. They just store them on their inexpensive car lots. Wow!
Their plan is to grow their store count by 10% per year. If they use the same business plan that they have successfully deployed for the last 30 years, each store lot will be accretive to earnings. Check out the most recent earnings from last month:
BENTONVILLE, Ark., Feb. 15, 2012 (GLOBE NEWSWIRE) -- America's Car-Mart, Inc. (Nasdaq:CRMT) today announced its operating results for its third fiscal quarter ended January 31, 2012.
Highlights of third quarter operating results:
Net income of $7.3 million ($.73 per diluted share) vs. $5.7 million ($.52 per diluted share) for prior year quarter (40.4% increase in fully diluted earnings per share)
Net charge-offs as a percentage of average Finance Receivables of 5.7% vs. 6.1% for the prior year quarter
Revenue increase of 13.8% to $105.4 million from $92.6 million for the prior year quarter with same store revenue growth of 7.9%
Retail unit sales increase of 8.5% to 8,965 from 8,266 for the prior year quarter.
Highlights of nine month operating results:
Net income of $23.3 million ($2.28 per diluted share) vs. $19.8 million ($1.77 per diluted share) for prior year period (28.8% increase in fully diluted earnings per share)
Revenue increase of 14.8% to $317 million from $276 million for the prior year period with same store revenue growth of 8.3 %
Retail unit sales increase of 10.9% to 27,933 from 25,178 for the prior year period. Average retail units sold per store per month increased to 28.5 from 28.0
Here’s what the boss had to say about how all of his used cars were moving:
"We saw the continuation of our strong operating results in the third quarter. By staying focused on customer success we have been able to consistently produce outstanding returns. Our strong performance is the direct result of taking great care of our customers, one at a time. We operate in a difficult business and the dedication and compassion demonstrated every day by all of our associates truly makes us stand out as the industry leader," said William H. ("Hank") Henderson, President and Chief Executive Officer of America's Car-Mart. "As we look forward, we are very excited to have the opportunity to not only grow our customer base in existing locations but to continue to add great new locations in the future. Our new store openings continue to go very well and these stores are really important in achieving our long-term goals. All of our efforts are directed to helping our customers succeed by working with them when they experience financial difficulties. This is what we do and we have done it very well for over 30 years."
"We are very pleased with our financial performance for the quarter. From an average store base of 111 we saw an 8.5% increase in unit sales and a 7.9% increase in same store revenues. Once again, based on our strong top line growth, we had impressive leveraging at the Selling, General and Administrative line. Our existing store base will continue to support significant growth into the future, and with the addition of new dealerships, we are committed to serving a growing customer base looking for good, basic, affordable transportation. Our focus on customer success continues to show up in our results," said Jeff Williams, Chief Financial Officer of America's Car-Mart. "Our credit results have been strong and have been very consistent over the past several years. Should our collection results for the fourth quarter come in within a range of where currently anticipated; we could be in the position of needing to reduce our allowance for credit losses based on our anticipated future losses within the portfolio in light of our consistent credit performance over an extended period of time."
"The Company repurchased 98,201 shares of its common stock during the third quarter. Since February 1, 2010 we have repurchased 2,283,109 shares, or 19.4% of our Company. The Company has 908,695 shares available under its existing repurchase plan and intends to repurchase shares in the future when conditions are favorable, subject to restrictions under its senior credit facility," added Mr. Williams. "We have opened six new dealerships so far this fiscal year and we plan to open three more between now and the end of the fiscal year, April 30, 2012. Our plans continue to be to open new dealerships at an approximate 10% annual rate into the future."
So my Caddy is up to 126,000 miles. With the money I make on this stock trade, maybe I’ll go out and buy a brand new used one.
I am HUGE!!
$$$MR. MARKET$$$
My little sister's in the front seat with an ice cream cone
My ma's in the black seat sittin' all alone
As my pa steers her slow out of the lot for a test drive down Michigan Avenue
Now, my ma, she fingers her wedding band
And watches the salesman stare at my old man's hands
He's tellin' us all 'bout the break he'd give us if he could, but he just can't
Well if I could, I swear I know just what I'd do
Now, mister, the day the lottery I win I ain't ever gonna ride in no used car again
Now, the neighbors come from near and far
As we pull up in our brand new used car
I wish he'd just hit the gas and let out a cry and tell 'em all they can kiss our asses goodbye
My dad, he sweats the same job from mornin' to morn
Me, I walk home on the same dirty streets where I was born
Up the block I can hear my little sister in the front seat blowin' that horn
The sounds echoin' all down Michigan Avenue
Now, mister, the day my numbers comes in I ain't ever gonna ride in no used car again
Now everyone who knows me knows that I am a HUGE Bruce Springsteen fan. Even better, he’s already back on tour and I’m going to see him with Austin in Philly next week and then in the Meadowlands the following week and once again in Newark in May. But there is a clear difference of opinion that I have with Mr. Springsteen. In his song, “Used Cars” from the underrated Nebraska album, Springsteen reflects on the sorrow and melancholy he experienced when he rode home in his brand new used car.
Well, $$$MR. MARKET$$$ loves buying used cars. I mean, why buy a new car when you can have 3 used cars for the same price? I mean, a new car is a used car the minute you drive it off the dealer lot.
That’s why I bought America's Car-Mart, Inc. (CRMT) today at $44.99 per share. I will sell it in 4 to 6 weeks at 51.93. Here’s why I like CRMT:
Well, first of all, look at the darn chart!
This stock is up 88% off of its 52 week low and its PE is only 14.7. Yea…you got it. This is an amazing growth stock that is as cheap as a brand new used car. That’s right baby…you have quarterly revenue growth of 14% on top of quarterly earnings growth of 28%. Used cars are cool. You have to buy a used car. Where are you going to get a new car anyway? Detroit??? GM is bankrupt. Why buy a new Accord when you can buy 2 used caddy’s for the same price? Why buy a new SUV when you can buy 2 used Chrysler Town and Countrys that Trevor can take to college and let his friends drive to Turkey Hill to buy ice cream and what not. I mean, who cares when he brings the car back from college and it smells like gak? It’s a used car.
America’s Car-Mart, Inc., through its subsidiaries, operates as an automotive retailer in the United States. It primarily sells older model used vehicles and provides financing for its customers. As of February 3, 2012, the company operated 112 automotive dealerships in 9 states. The company was founded in 1981 and is based in Bentonville, Arkansas. It is the nation’s largest publicly held automotive retailer focused exclusively on the “Integrated Auto Sales and Finance” segment. Focus is on cultivating relationships and earning repeat business.
They have been successful primarily because their competition sucks. In a fragmented Industry – competition is made up of smaller “mom-and-pop” dealers lacking Car-Mart’s strengths in:
• Marketing / Branding
• Central Oversight
• Information Technology
• Purchasing
• Solid Financial Position
• Experienced Management Team
There are other companies who try to mimic CRMT’s strategy, but they miss the boat. AutoNation and CarMax, have faced difficulty in moving trucks and sport utility vehicles off their lots, due to changing consumer buying patterns and/or restricted access in obtaining auto financing, Car-Mart has success in selling basic and affordable transportation. With stubborn unemployment prevailing, Car-Mart's decision to not focus on luxury or sports cars is paying off. The average car sold was between three and ten years of age with 80,000 to 130,000 miles on the odometer.
Lending money to sub-prime borrowers is risky, yes but Car-Mart has a decentralized business strategy, with each dealership responsible for making customer credit decisions and collecting on the loans it originates. And, substantially all associate incentive compensation is tied directly -- or indirectly -- to collection results. So the proprietors are incentivised to be wise bankers as well as cracker jack sales people. This becomes apparent if you review the credit losses which, on a percentage basis, tend to be higher at new and developing stores (under six years of age), for those dealerships tend to have more inexperienced managers (in making credit decisions and collecting on customer loans) and less repeat (reliable) customers.
Revenues have grown each and every year for over 12 years. That means they’ve gone through 2 recessions and still grow their business. Sounds like a good business plan to me. Or maybe it’s the recessions that increased their growth….hmmmm. They’ve grown their customer base in 10 years from 18,000 people to 53,000 customers. Remember, once someone gets the used car bug, they are repeat customers (like me).
Look at these satisfied customers:
Brian and Susan Lewis - CAR-MART of Rogers and Tuscaloosa Customers
"We have purchased 9 vehicles from Car-Mart. We bought our first one from CAR-MART of Rogers, AR and continued to buy from them for many years. Even when we moved to New Mexico, we drove 12 hours to go back there because we knew we could trust the staff. Now that we have moved to Georgia, we shortened our trip and drove 4 hours to the Tuscaloosa, AL lot where we were again treated like family. CAR-MART should teach other dealers on how to do business. They always listen to us, and that is wildly important."
Brian and Susan Lewis
The other way that CRMT makes money is through the financing of purchases for their customer base. Since credit has tightened up considerably after the most recent bank bust, CRMT has greased their earnings by greasing the palms of its customers with some car loans that provide significant returns (14.7% interest rates..nice!) on the company’s capital base. On top of all that, the average sales price of the vehicles has increased from $9400 to $9900. That’s a 5% revenue kick without even selling an additional vehicle! The average profit per vehicle is approximately $1400. So they are making a 14% margin on used inventory. They don’t even have to make the cars. They just store them on their inexpensive car lots. Wow!
Their plan is to grow their store count by 10% per year. If they use the same business plan that they have successfully deployed for the last 30 years, each store lot will be accretive to earnings. Check out the most recent earnings from last month:
BENTONVILLE, Ark., Feb. 15, 2012 (GLOBE NEWSWIRE) -- America's Car-Mart, Inc. (Nasdaq:CRMT) today announced its operating results for its third fiscal quarter ended January 31, 2012.
Highlights of third quarter operating results:
Net income of $7.3 million ($.73 per diluted share) vs. $5.7 million ($.52 per diluted share) for prior year quarter (40.4% increase in fully diluted earnings per share)
Net charge-offs as a percentage of average Finance Receivables of 5.7% vs. 6.1% for the prior year quarter
Revenue increase of 13.8% to $105.4 million from $92.6 million for the prior year quarter with same store revenue growth of 7.9%
Retail unit sales increase of 8.5% to 8,965 from 8,266 for the prior year quarter.
Highlights of nine month operating results:
Net income of $23.3 million ($2.28 per diluted share) vs. $19.8 million ($1.77 per diluted share) for prior year period (28.8% increase in fully diluted earnings per share)
Revenue increase of 14.8% to $317 million from $276 million for the prior year period with same store revenue growth of 8.3 %
Retail unit sales increase of 10.9% to 27,933 from 25,178 for the prior year period. Average retail units sold per store per month increased to 28.5 from 28.0
Here’s what the boss had to say about how all of his used cars were moving:
"We saw the continuation of our strong operating results in the third quarter. By staying focused on customer success we have been able to consistently produce outstanding returns. Our strong performance is the direct result of taking great care of our customers, one at a time. We operate in a difficult business and the dedication and compassion demonstrated every day by all of our associates truly makes us stand out as the industry leader," said William H. ("Hank") Henderson, President and Chief Executive Officer of America's Car-Mart. "As we look forward, we are very excited to have the opportunity to not only grow our customer base in existing locations but to continue to add great new locations in the future. Our new store openings continue to go very well and these stores are really important in achieving our long-term goals. All of our efforts are directed to helping our customers succeed by working with them when they experience financial difficulties. This is what we do and we have done it very well for over 30 years."
"We are very pleased with our financial performance for the quarter. From an average store base of 111 we saw an 8.5% increase in unit sales and a 7.9% increase in same store revenues. Once again, based on our strong top line growth, we had impressive leveraging at the Selling, General and Administrative line. Our existing store base will continue to support significant growth into the future, and with the addition of new dealerships, we are committed to serving a growing customer base looking for good, basic, affordable transportation. Our focus on customer success continues to show up in our results," said Jeff Williams, Chief Financial Officer of America's Car-Mart. "Our credit results have been strong and have been very consistent over the past several years. Should our collection results for the fourth quarter come in within a range of where currently anticipated; we could be in the position of needing to reduce our allowance for credit losses based on our anticipated future losses within the portfolio in light of our consistent credit performance over an extended period of time."
"The Company repurchased 98,201 shares of its common stock during the third quarter. Since February 1, 2010 we have repurchased 2,283,109 shares, or 19.4% of our Company. The Company has 908,695 shares available under its existing repurchase plan and intends to repurchase shares in the future when conditions are favorable, subject to restrictions under its senior credit facility," added Mr. Williams. "We have opened six new dealerships so far this fiscal year and we plan to open three more between now and the end of the fiscal year, April 30, 2012. Our plans continue to be to open new dealerships at an approximate 10% annual rate into the future."
So my Caddy is up to 126,000 miles. With the money I make on this stock trade, maybe I’ll go out and buy a brand new used one.
I am HUGE!!
$$$MR. MARKET$$$
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