America's Car-Mart, Inc. (NASDAQ: CRMT) surprised Wall Street this morning with stronger-than-expected quarterly earnings. The auto retailer banked a first-quarter profit of $7 million, or 60 cents per share, up from 45 cents per share in the year-ago period. Revenue climbed 11% to $83.8 million, buoyed by an 8.5% jump in same-store sales.
Both figures were better than analysts expected, with consensus estimates calling for a profit of 41 cents per share on $78.0 million in revenue. The company added to the glad tidings by reporting that its provision for credit losses dipped to 19.5% of sales, compared to 20.9% in the same quarter last year.
The stock has spiked sharply higher today, adding nearly 13% within the first hour of trading. Today's boost of buying pressure sent CRMT to a new four-year high of $23.46, its highest price since June 2005.
However, the shares were already riding high before today's earnings surprise. Since March, CRMT has climbed consistently higher along the support of its 10-week and 20-week moving averages. These trendlines have escorted the security to a year-to-date gain of 49.2%.
Short sellers could very well be the driving force behind today's rally, with 7.2% of CRMT's float dedicated to short interest. The current accumulation of bearish bets would take 6.60 trading days to repurchase, at the equity's average daily volume; however, CRMT has already surpassed its average daily volume by a wide margin -- nearly 389,000 shares have traded already, compared to 100,000 on a normal day.
Elizabeth Harrow is an analyst and financial writer in the research department at Schaeffer's Investment Research. She is featured in the video series Schaeffer's Daily Q&A on SchaeffersResearch.com.
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