Cars (CARS) AI Stock Analysis

• Market Cap: $757.62M
• Dividend Yield: N/A
• Average Volume (3M): 714.08K
• Price to Earnings (P/E): 20.1
• Beta (1Y): 1.33
• Revenue Growth: 0.68%
• EPS Growth: 67.41%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 97
• Industry: Auto - Dealerships
• EPS (TTM): 0.41
• Shares Outstanding: 61,445,496
• 10 Day Avg. Volume: 827,469
• 30 Day Avg. Volume: 714,076
• 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: 1.56
• Enterprise Value/Revenue: 1.65
• Enterprise Value/Gross Profit: 2.00
• Enterprise Value/Ebitda: 6.28
• 1Y Price Target: $16.58
• Price Target Upside: 34.47% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 64 Neutral
• Price Target: $13.50 ▲(9.49% Upside)

Cars.com shows a stable financial position with strong gross profit margins and effective cash conversion, but faces challenges with declining revenue growth and profitability. Technical indicators suggest potential bearish momentum, while valuation metrics indicate moderate pricing. The earnings call provided a positive outlook with growth in dealer count and OEM revenue, but highlighted challenges such as dealer revenue softness and tariff uncertainties.

Positive Factors

Strong Dealer Growth

The increase in dealer count indicates robust platform adoption and strengthens Cars' market position, enhancing its long-term revenue potential.

Enhanced AI Features

AI innovations improve user experience and lead generation, potentially increasing sales conversion rates and driving sustainable growth.

OEM Revenue Growth

Growth in OEM revenue reflects strong partnerships and demand, supporting Cars' diversified revenue streams and long-term financial health.

Negative Factors

Declining Revenue Growth

Negative revenue growth poses a challenge to future earnings potential, indicating potential market saturation or competitive pressures.

Net Income Decline

A decline in net income suggests reduced profitability, which could impact Cars' ability to invest in growth and innovation over time.

Softness in Dealer Revenue

Decreased dealer revenue indicates challenges in maintaining dealer engagement and pricing power, potentially affecting long-term revenue stability.

Cars Business Overview & Revenue Model

Company Description

Cars (CARS) is an online platform specializing in the automotive sector, focusing on providing consumers with a comprehensive range of services related to buying and selling vehicles. The company operates in various segments, including automotive e-commerce, online vehicle listings, and car valuation services. CARS aims to simplify the car buying process for consumers while offering dealers a robust platform to reach a wider audience and manage their inventory more effectively.

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

Cars demonstrates strong gross profit margins and effective cash conversion, but faces challenges with declining revenue growth and profitability. The balance sheet shows moderate leverage, but the decrease in return on equity suggests potential inefficiencies. Overall, the company maintains a stable financial position but needs to address growth and profitability concerns.

Income Statement

The company shows strong gross profit margins consistently above 80%, indicating efficient cost management. However, the net profit margin has decreased in the TTM period to 5.71% from 6.70% in the previous year, reflecting a decline in profitability. Revenue growth has turned negative in the TTM period, which is a concern for future earnings potential.

Balance Sheet

The debt-to-equity ratio has improved to 0.94 in the TTM period from 0.89, indicating a slight increase in leverage. Return on equity has decreased to 8.26% from 9.42%, showing reduced efficiency in generating returns for shareholders. The equity ratio remains stable, suggesting a balanced capital structure.

Cash Flow

The operating cash flow to net income ratio is strong at 1.43, indicating good cash generation relative to net income. However, free cash flow growth is negative in the TTM period, which could impact future investment capabilities. The free cash flow to net income ratio is healthy at 1.01, showing effective cash conversion.

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	366.39M	538.92M	509.48M	445.97M
EBITDA	188.62M	201.24M	151.53M	152.29M	144.44M	-796.38M
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	500.88M	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	139.49M	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: Negative
• Last Price: 12.33
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CARS, the sentiment is Negative. The current price of 12.33 is below the 20-day moving average (MA) of 13.04, below the 50-day MA of 12.91, and below the 200-day MA of 13.29, indicating a bearish trend. The MACD of -0.20 indicates Positive momentum. The RSI at 41.18 is Neutral, neither overbought nor oversold. The STOCH value of 16.15 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CARS.

Cars Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CARS	64 Neutral	$757.62M	20.07	8.37%	―	0.68%	67.41%
CANG	58 Neutral	$797.69M	-1.23	7.34%	―	348.38%	-1821.85%
CRMT	50 Neutral	$238.00M	18.49	3.14%	―	0.79%	―
VRM	49 Neutral	$138.36M	-0.73	-58.11%	―	-90.19%	79.52%
SDA	46 Neutral	$244.29M	-3.28	-577.39%	―	―	―
UXIN	42 Neutral	$692.73M	-16.97	74.03%	―	―	―
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%

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.