Cars (CARS) AI Stock Analysis

• Market Cap: $776.06M
• Dividend Yield: N/A
• Average Volume (3M): 850.60K
• Price to Earnings (P/E): 20.6
• Beta (1Y): 1.33
• Revenue Growth: 0.68%
• EPS Growth: 67.41%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 93
• Industry: Auto - Dealerships
• EPS (TTM): 0.41
• Shares Outstanding: 61,445,496
• 10 Day Avg. Volume: 1,186,458
• 30 Day Avg. Volume: 850,599
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.53
• Enterprise Value/Revenue: 1.65
• Enterprise Value/Gross Profit: 2.00
• Enterprise Value/Ebitda: 6.84
• 1Y Price Target: $16.64
• Price Target Upside: 31.75% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 66 Neutral
• Price Target: $13.50 ▲(6.89% Upside)

Cars.com exhibits a stable financial position with strong gross profit margins and effective cash conversion. However, declining revenue growth and profitability, along with a high P/E ratio, pose challenges. The earnings call provided a balanced view with positive growth initiatives but also highlighted some revenue softness. Technical indicators suggest caution due to mixed signals.

Positive Factors

Acquisition Impact

The DealerClub acquisition could be a game changer for Cars Commerce by offering an end-to-end solution to manage the entire lifecycle of a vehicle on a unified technology platform.

Financial Performance

Cars Commerce is a solid excess cash flow generator and has been actively returning cash to shareholders via open market share repurchases.

Market Share Growth

Cars Commerce gained market share in Q1/25 as dealer count increased by 44 sequentially to 19,250 dealers, representing the strongest quarter of sequential organic growth since mid-2022.

Negative Factors

OEM Commitment Slowdown

OEMs are slowing down their commitments, which could impact revenue growth in the near term.

Revenue Growth Challenges

Revenue growth remains sluggish with no relief due to tariff uncertainty, capping potential stock appreciation.

Revenue Guidance Uncertainty

Cars Commerce is seeing signs that the magnitude and timing of media investments is shifting due to macro and tariff uncertainty, leading to the suspension of specific full-year revenue guidance for 2025.

Cars Business Overview & Revenue Model

Company Description

Cars.com Inc. operates as a digital marketplace and provides solutions for the automotive industry. Its platform connects car shoppers with sellers. The company, through its marketplace, dealer websites, and other digital products, showcases dealer inventory, elevate and amplify dealers' and automotive manufacturers' (OEMs) brands, connect sellers with ready-to-buy audience, and empower shoppers with the resources and information needed to make car buying decisions. It also offers marketplace products, such as marketplace subscription advertising and social selling services; digital solutions, including Website platform hosting, AI chat tool, digital retailing, and review and reputation management; and advertising comprising display advertising, instant loan screening and approvals, digital advertising, and in-market audio services. As of December 31, 2021, the company served 19,179 dealer customers in 50 states, which included franchise and independent dealers, with digital and brick-and-mortar stores; and primary automakers selling vehicles in the United States. Its customers are local car dealers, OEMs, and other national advertisers. Cars.com Inc. was founded in 1998 and is based in Chicago, Illinois.

How the Company Makes Money

Cars generates revenue primarily through its online marketplace by charging dealers for listing their vehicles on the platform. This includes subscription fees for premium listings and additional advertising services that enhance visibility. Additionally, CARS earns revenue from transaction fees when vehicles are sold through its platform. The company also monetizes its services by offering value-added features such as vehicle appraisals, financing options, and insurance products in collaboration with strategic partners. These partnerships with financial institutions and insurance companies help diversify its revenue streams and provide customers with a seamless car buying experience.

Cars Financial Statement Overview

Summary

The company demonstrates solid financial health with strong cash flow generation and stable profitability margins. While leverage remains moderate, improvements in ROE and stable revenue trajectory are positive. However, slight contraction in profitability margins and high debt levels are concerns.

Income Statement

The company has a stable gross profit margin of approximately 78.7% in TTM, indicating effective cost management. However, the net profit margin shows a decline to 6.3% compared to 6.7% last year, reflecting reduced profitability. Revenue growth has been modest, with a slight decrease in TTM compared to the previous year annual data.

Balance Sheet

The debt-to-equity ratio is approximately 0.93, indicating moderate leverage. ROE improved to 9.3% in TTM, showing better returns on equity. The equity ratio is stable at around 45.2%, reflecting a balanced capital structure. However, the high level of debt remains a concern.

Cash Flow

Free cash flow increased by 21.3% in TTM, a strong indicator of cash generation capability. The operating cash flow to net income ratio is robust at 3.27, suggesting efficient cash operations. The company maintains strong free cash flow relative to net income at 3.22, highlighting good cash management.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	717.85M	719.15M	689.18M	653.88M	623.68M	547.50M
Gross Profit	593.02M	594.82M	566.98M	538.92M	509.48M	445.97M
EBITDA	173.33M	201.24M	151.53M	152.29M	151.57M	-785.28M
Net Income	41.02M	48.19M	118.44M	17.21M	10.79M	-817.12M
Balance Sheet
Total Assets	1.06B	1.11B	1.17B	1.02B	1.01B	1.08B
Cash, Cash Equivalents and Short-Term Investments	27.70M	50.67M	39.20M	31.71M	39.07M	67.72M
Total Debt	455.90M	455.29M	483.25M	472.38M	466.32M	583.90M
Total Liabilities	581.44M	600.38M	680.34M	640.44M	640.27M	735.54M
Stockholders Equity	483.22M	511.49M	492.11M	384.43M	366.93M	340.18M
Cash Flow
Free Cash Flow	142.68M	149.52M	115.84M	108.80M	118.81M	121.90M
Operating Cash Flow	141.35M	152.52M	136.72M	128.51M	138.00M	138.62M
Investing Cash Flow	-41.23M	-24.60M	-97.05M	-84.38M	-39.45M	-16.71M
Financing Cash Flow	-99.08M	-115.96M	-31.75M	-51.49M	-127.20M	-67.73M

Cars Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 12.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CARS, the sentiment is Neutral. The current price of 12.63 is below the 20-day moving average (MA) of 12.84, above the 50-day MA of 12.11, and below the 200-day MA of 14.16, indicating a neutral trend. The MACD of 0.10 indicates Positive momentum. The RSI at 50.66 is Neutral, neither overbought nor oversold. The STOCH value of 79.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CARS.

Cars Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CRMT	67 Neutral	$370.42M	21.34	3.45%	―	-0.21%	―
CARS	66 Neutral	$776.06M	20.56	8.37%	―	0.68%	67.41%
Sector *	60 Neutral	$44.16B	2.09	-11.99%	4.01%	2.29%	-39.41%
CANG	55 Neutral	$499.22M	6.63	0.12%	―	40.31%	-204.86%
RDNW	51 Neutral	$112.64M	―	-246.90%	―	-14.27%	67.06%
UXIN	42 Neutral	$744.27M	―	260.24%	―	―	―
VRM	42 Neutral	$155.57M	―	-45.88%	―	-90.19%	79.52%

Cars Corporate Events

Cars.com Inc. Approves Key Proposals at Annual Meeting

On June 4, 2025, Cars.com Inc. held its Annual Meeting of Stockholders, where several key proposals were approved. These included the Amended and Restated Omnibus Incentive Compensation Plan, which increased the number of shares available by 4 million and extended the plan’s term to 2035, as well as an amendment to the Certificate of Incorporation for officer exculpation. Additionally, the stockholders elected directors, ratified the appointment of Ernst & Young LLP as the independent auditor for 2025, and decided on annual advisory votes for executive compensation, aligning with the board’s recommendation.

The most recent analyst rating on (CARS) stock is a Hold with a $19.00 price target. To see the full list of analyst forecasts on Cars stock, see the CARS Stock Forecast page.