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CarGurus Inc (CARG)
NASDAQ:CARG
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CarGurus
(NASDAQ:CARG)
66Neutral
Positive Factors
Dealer Expansion
A robust 461 net dealers were added in the U.S. in the quarter, more than were added in all of 2024.
Market Share Growth
CARG clearly gained market share, both in terms of dealer count and other metrics.
Product Adoption
Adoption of value-added products has led to higher engagement and dealer retention with long-term contracts accounting for ~40% of new contracts signed.
Negative Factors
CarOffer Challenges
Less positive developments in the quarter included the acknowledgment that CarOffer needs further improvement.
Revenue Miss
Shares traded down (7%) in the aftermarket, attributed to the headline revenue miss.
Slowing Growth Concerns
The price target is lowered to account for slowing growth in marketplace subscription revenue.
CarGurus (CARG) vs. S&P 500 (SPY)
Market Cap
$3.21B
Dividend YieldN/A
Average Volume (3M)1.18M
Price to Earnings (P/E)91.1
Beta (1Y)1.37
Revenue Growth0.63%
EPS Growth15.34%
CountryUS
Employees1,282
SectorConsumer Cyclical
Sector Strength74
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.46
Shares Outstanding84,630,380
10 Day Avg. Volume1,341,585
30 Day Avg. Volume1,182,003
Financial Highlights & Ratios
PEG Ratio0.95
Price to Book (P/B)5.52
Price to Sales (P/S)0.00
P/FCF Ratio17.02
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.89Price Target Upside19.81% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering10
CarGurus Business Overview & Revenue Model
Company DescriptionCarGurus, Inc. (CARG) is a leading online automotive marketplace that connects buyers and sellers of new and used cars. Founded in 2006 and headquartered in Cambridge, Massachusetts, CarGurus operates in various international markets, offering services that facilitate the buying and selling process for consumers and dealers. The company is known for its data-driven approach to vehicle valuation and dealer ratings, providing users with comprehensive insights into pricing and market value.
How the Company Makes MoneyCarGurus makes money primarily through its digital marketplace platform, which generates revenue from dealers and other automotive businesses. The company's key revenue streams include subscription fees paid by dealers to list their inventory on the platform, advertising fees for promoting specific vehicles or dealerships, and referral fees from lead generation services. Additionally, CarGurus offers premium subscription packages with enhanced features like priority listings, targeted advertising, and advanced analytics, allowing dealers to increase their visibility and improve sales performance. Strategic partnerships with automotive manufacturers and financial institutions also contribute to its revenue by offering integrated financing and leasing options to consumers.
CarGurus Key Performance Indicators (KPIs)
Any
Paying Dealers by Geography
Shows the distribution of paying dealers across regions, highlighting market penetration and potential areas for expansion or increased competition.
Shows the distribution of paying dealers across regions, highlighting market penetration and potential areas for expansion or increased competition.
Data provided by:
Main Street Data
Main Street DataCarGurus Financial Statement Overview
Summary
CarGurus presents a mixed financial profile with strong cash flow but declining revenue and profitability. The company maintains a robust equity position, but rising debt levels are concerning. The strong equity provides stability, though operational challenges remain.Income Statement
CarGurus has experienced fluctuating revenue with a notable decline from 2022 to 2023. Gross profit margin remains strong, but net income has decreased over the years, impacting net profit margins. EBITDA margin shows a downward trend, signaling potential operational challenges.55
Neutral
Balance Sheet
The company maintains a robust equity position with a strong equity ratio, but debt levels have been increasing, raising the debt-to-equity ratio. Return on equity has weakened due to declining net income, suggesting reduced profitability.65
Positive
Cash Flow
CarGurus has demonstrated strong operating cash flow, with free cash flow showing moderate growth. The free cash flow to net income ratio indicates efficient cash generation relative to net income, although fluctuations in financing cash flow could pose risks.70
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 894.38M | 914.24M | 1.66B | 951.37M | 551.45M | Gross Profit |
| 738.95M | 651.45M | 657.55M | 657.36M | 508.75M | EBIT |
| 13.41M | 32.63M | 108.48M | 148.27M | 97.76M | EBITDA |
| 173.27M | 81.10M | 167.76M | 200.01M | 104.62M | Net Income Common Stockholders |
| 20.97M | 31.10M | 84.39M | 109.24M | 77.55M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 304.19M | 312.09M | 469.52M | 321.94M | 290.30M | Total Assets |
| 824.54M | 918.93M | 927.10M | 931.57M | 502.30M | Total Debt |
| 192.74M | 194.39M | 66.42M | 70.70M | 69.89M | Net Debt |
| -111.45M | -96.97M | -403.10M | -161.24M | -120.40M | Total Liabilities |
| 282.85M | 302.07M | 155.74M | 251.93M | 128.71M | Stockholders Equity |
| 541.69M | 616.85M | 734.61M | 516.84M | 373.59M |
| Cash Flow | Free Cash Flow | |||
| 180.32M | 83.32M | 238.84M | 84.42M | 149.21M | Operating Cash Flow |
| 255.49M | 124.53M | 256.11M | 98.29M | 156.74M | Investing Cash Flow |
| -72.97M | -61.56M | 72.73M | -68.15M | -16.89M | Financing Cash Flow |
| -168.63M | -253.64M | -90.04M | 17.81M | -10.09M |
CarGurus Technical Analysis
Positive
32.46
Price Trends
29.18
Positive
32.97
Negative
32.15
Positive
Market Momentum
1.13
Negative
64.97
Neutral
86.64
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CARG, the sentiment is Positive. The current price of 32.46 is above the 20-day moving average (MA) of 29.37, above the 50-day MA of 29.18, and above the 200-day MA of 32.15, indicating a bullish trend. The MACD of 1.13 indicates Negative momentum. The RSI at 64.97 is Neutral, neither overbought nor oversold. The STOCH value of 86.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CARG.
CarGurus Risk Analysis
CarGurus disclosed 43 risk factors in its most recent earnings report. CarGurus reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CarGurus Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $877.52M | 23.58 | 32.17% | ― | 113.43% | ― | |
69 Neutral | $16.80B | ― | -1.72% | ― | 14.96% | 49.24% | |
66 Neutral | $3.21B | 91.08 | 7.98% | ― | 0.63% | 15.34% | |
65 Neutral | $3.17B | 14.13 | 6.55% | 6.56% | -5.77% | -15.07% | |
61 Neutral | $6.98B | 11.35 | 2.88% | 3.90% | 2.65% | -21.84% | |
49 Neutral | $141.16M | ― | -26.46% | ― | 10.18% | 1.47% | |
47 Neutral | $8.89B | 189.78 | -9.36% | ― | -98.74% | -128.03% |
* Consumer Cyclical Sector Average
Performance Comparison
CARG
CarGurus
32.46
8.89
37.72%
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37.32
18.38
97.04%
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TrueCar
1.61
-1.44
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EVER
EverQuote
24.27
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CarGurus Earnings Call Summary
Earnings Call Date:May 08, 2025
(Q1-2025)
| % Change Since: 16.14%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
The earnings call presented a strong performance in the marketplace segment, international growth, and robust dealer and consumer engagement. However, it also highlighted significant challenges in the wholesale and product revenue segments, specifically with the CarOffer platform. While the highlights show promising growth and innovation, the lowlights indicate areas requiring strategic reassessment and improvement.Q1-2025 Updates
Positive Updates
Marketplace Revenue Growth
Marketplace revenue grew 13% year-over-year, adding $25 million, driven by dealer count growth, subscription tier upgrades, and increased adoption of value-added products and services.
International Revenue Expansion
International revenue expanded 20% year-over-year, with significant growth in Canada and the UK, driven by a 22% year-over-year aggregate lead growth and continued product innovation.
Improved Marketplace Margins
Marketplace adjusted EBITDA grew 27% year-over-year with margins improving more than 340 basis points to nearly 33%.
Strong Dealer Engagement and Adoption
Dealer adoption of new products like VIN level targeting and Digital Deal has increased, with nearly 1,200 net new global dealer additions year-over-year.
Consumer Engagement and Brand Strength
CarGurus was Canada's most downloaded auto app in Q1, contributing to an 85% year-over-year increase in direct traffic and reinforcing brand strength.
Negative Updates
Decline in Wholesale and Product Revenue
Wholesale revenue was down 52% year-over-year, and product revenue was down 58% year-over-year, driven by lower transaction volumes.
Challenges with CarOffer Platform
CarOffer faced structural limitations and operational inefficiencies, prompting a strategic assessment to identify sustainable growth and profitability potential.
Company Guidance
During the CarGurus, Inc. First Quarter 2025 Earnings Conference Call, the company provided detailed guidance and metrics reflecting their strong performance and future outlook. The first quarter revenue was reported at $225 million, showing a 4% year-over-year increase, while marketplace revenue grew by 13% year-over-year to $212 million. International revenue also saw a significant rise of 20% year-over-year. The adjusted EBITDA increased by 32% year-over-year to $66.3 million, with a margin of 29%. The company added 734 paying US dealers year-over-year, marking the highest dealer growth since pre-pandemic times. QARSD grew by 10% year-over-year. For the second quarter of 2025, CarGurus anticipates total revenue to range from $222 million to $242 million, with marketplace revenue expected to grow between 12% and 15% year-over-year. Despite macroeconomic uncertainties, including tariffs, the company remains optimistic, projecting a low double-digit year-over-year growth rate by the end of 2025.CarGurus Corporate Events
Executive/Board Changes
CarGurus Announces CFO Departure and Leadership Shift
Neutral
Feb 24, 2025
CarGurus, Inc. announced that effective March 7, 2025, Elisa Palazzo will step down as the Chief Financial Officer. Jason Trevisan, the current CEO, will assume the roles of principal financial officer and principal accounting officer until a successor is appointed. This change is part of the company’s ongoing executive management adjustments.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.