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CarGurus Inc (CARG)
NASDAQ:CARG
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CarGurus
(NASDAQ:CARG)
60Neutral
Positive Factors
Dealer Engagement
Adoption of value-added products has led to higher engagement and dealer retention with long-term contracts accounting for ~40% of new contracts signed.
Market Position
CARG is increasingly in the pole position in used auto lead generation, leveraging consumer preferences gleaned from hosting the most visited shopping site alongside wholesale and retail pricing data.
Product Innovation
CARG continues to improve AI-powered engagement with ~30K personalized car comparison pages launched, with initial results showing positive user interaction.
Negative Factors
Digital Wholesale
Digital Wholesale revenue was $18M, down 55% year-over-year and 33% sequentially.
Financial Performance
CarGurus, Inc. reported mixed 4Q results, with revenue slightly below consensus but adjusted EBITDA just above the Street's expectations.
Revenue Miss
Shares traded down (7%) in the aftermarket, attributed to the headline revenue miss.
CarGurus (CARG) vs. S&P 500 (SPY)
Market Cap
$2.92B
Dividend YieldN/A
Average Volume (3M)1.53M
Price to Earnings (P/E)154.6
Beta (1Y)1.50
Revenue Growth-2.17%
EPS Growth-26.53%
CountryUS
Employees1,282
SectorConsumer Cyclical
Sector Strength55
IndustryInternet Content & Information
Share Statistics
EPS (TTM)0.18
Shares Outstanding89,429,070
10 Day Avg. Volume1,611,771
30 Day Avg. Volume1,531,232
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)3.52
Price to Cash Flow (P/CF)10.40
P/FCF Ratio10.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$38.50Price Target Upside44.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering9
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 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
Negative
26.57
Price Trends
32.83
Negative
35.01
Negative
31.72
Negative
Market Momentum
-1.25
Negative
36.82
Neutral
31.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CARG, the sentiment is Negative. The current price of 26.57 is below the 20-day moving average (MA) of 29.08, below the 50-day MA of 32.83, and below the 200-day MA of 31.72, indicating a bearish trend. The MACD of -1.25 indicates Negative momentum. The RSI at 36.82 is Neutral, neither overbought nor oversold. The STOCH value of 31.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $773.78M | 24.88 | 29.75% | ― | 73.72% | ― | |
76 Outperform | $2.98B | 13.74 | 6.76% | 7.05% | -3.42% | -14.23% | |
63 Neutral | $15.48B | ― | -2.39% | ― | 14.96% | 29.56% | |
60 Neutral | $2.92B | 154.59 | 3.62% | ― | -2.17% | -26.53% | |
59 Neutral | $11.74B | 10.16 | -1.06% | 4.15% | 1.27% | -16.61% | |
49 Neutral | $5.52B | 189.78 | -9.36% | ― | -98.74% | -128.03% | |
49 Neutral | $138.74M | ― | -22.31% | ― | 10.64% | 38.48% |
* Consumer Cyclical Sector Average
Performance Comparison
CARG
CarGurus
26.57
3.69
16.13%
NBIS
Nebius Group
21.04
2.10
11.09%
ATHM
AutoHome
25.41
0.13
0.51%
TRUE
TrueCar
1.59
-1.47
-48.04%
EVER
EverQuote
21.15
1.79
9.25%
Z
Zillow Group Class C
61.81
16.55
36.57%
CarGurus Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -29.32% | Next Earnings Date: May 8, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong growth in CarGurus' marketplace and international businesses, with significant achievements in OEM advertising and adjusted EBITDA growth. However, the challenges in the Digital Wholesale segment and declines in wholesale and product revenues marked notable areas of concern. The positive aspects, particularly the robust performance in key revenue segments and successful product innovations, outweigh the lowlights.Highlights
Strong Marketplace Revenue Growth
CarGurus' full-year marketplace revenue increased by 14% year-over-year, with progressive revenue growth throughout the year.
International Business Expansion
The international business saw a significant acceleration with annual revenue up 23% year-over-year and meaningful operating profit expansion.
OEM Advertising Business Rebound
The OEM advertising business returned to double-digit year-over-year expansion after several years of contraction, renewing all existing customers and attracting new ones.
Record Adjusted EBITDA Growth
Annual consolidated adjusted EBITDA grew 26% year-over-year, reaching $51 million, with margins expanding over 600 basis points year-over-year to nearly 28%.
Increased Dealer Engagement
Dealer Data Insights and other product innovations resulted in higher dealer engagement and retention, with long-term contracts accounting for over 40% of the new contract base in Q4.
Innovative Consumer Experience Enhancements
Personalization efforts led to a 10% increase in lead conversion, and the integration of AI-driven personalized car comparison pages doubled user engagement.
Lowlights
Challenges in Digital Wholesale Segment
The Digital Wholesale segment ended the year with an $18 million adjusted EBITDA loss, reflecting declines in transaction volume.
Wholesale Revenue Decline
Wholesale revenue was $10 million for the fourth quarter, down 55% year-over-year and down 19% sequentially due to a decline in dealer-to-dealer transaction volume.
Product Revenue Drop
Product revenue was $8 million for the fourth quarter, down 55% year-over-year and down 44% sequentially.
Company Guidance
During the CarGurus earnings call, the company provided comprehensive guidance on various key metrics. For the fiscal year 2024, marketplace revenue increased by 14% year-over-year, with international revenue growing by 23% and operating profit improving meaningfully. The company's annual consolidated adjusted EBITDA rose by 26% to $51 million, with margins expanding over 600 basis points to nearly 28%. However, the Digital Wholesale segment recorded an $18 million adjusted EBITDA loss due to reduced transaction volumes. CarGurus plans to focus on enhancing dealer value, improving consumer experiences, enabling digital transactions, and rebuilding the Digital Wholesale platform in 2025. For the first quarter of 2025, consolidated revenue is expected to be in the range of $216 million to $236 million, with Marketplace revenue projected to grow between 12% and 14% year-over-year. Consolidated adjusted EBITDA is forecasted to range from $60 million to $68 million, while non-GAAP earnings per share are anticipated to be between $0.41 and $0.47.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.