America's Car-Mart (CRMT) Soars 7.6%: Is Further Upside Left in the Stock?

America's Car-Mart (CRMT) shares rallied 7.6% in the last trading session to close at $107.33. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 5.3% loss over the past four weeks.

While there is no company-specific news that triggered Friday’s share price appreciation, the rally could be attributed to robust demand of used cars. With the chip crisis not likely to abate anytime soon, it may take more time for new vehicle sales to pick up pace and the used-vehicle market may continue its upward trajectory, thereby boosting Americas’ Car-Mart’s prospects. Additionally, the company is benefitting from high prices of used vehicles amid supply demand mismatch.

This auto retailer is expected to post quarterly earnings of $2.79 per share in its upcoming report, which represents a year-over-year change of -21.9%. Revenues are expected to be $335.02 million, up 19.5% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For America's Car-Mart, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on CRMT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

America's Car-Mart is a member of the Zacks Automotive - Retail and Whole Sales industry. One other stock in the same industry, Sonic Automotive (SAH), finished the last trading session 4.3% higher at $38.27. SAH has returned -21.2% over the past month.

For Sonic Automotive , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $2.53. This represents a change of -3.8% from what the company reported a year ago. Sonic Automotive currently has a Zacks Rank of #3 (Hold).

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