CarGurus (CARG) AI Stock Analysis

• Market Cap: $3.59B
• Dividend Yield: N/A
• Average Volume (3M): 1.11M
• Price to Earnings (P/E): 29.1
• Beta (1Y): 1.19
• Revenue Growth: 4.80%
• EPS Growth: N/A
• Country: US
• Employees: 1,282
• Sector: Consumer Cyclical
• Sector Strength: 83
• Industry: Internet Content & Information
• EPS (TTM): 0.57
• Shares Outstanding: 85,043,940
• 10 Day Avg. Volume: 1,175,544
• 30 Day Avg. Volume: 1,114,547
• 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: 0.92
• Enterprise Value/Revenue: 3.61
• Enterprise Value/Gross Profit: 4.22
• Enterprise Value/Ebitda: 18.04
• 1Y Price Target: $39.00
• Price Target Upside: 7.85% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

• Rating: 73 Outperform
• Price Target: $35.00 ▼(-3.21% Downside)

CarGurus demonstrates strong financial performance and positive earnings call insights, particularly in its Marketplace and international segments. However, mixed technical indicators and a high valuation pose potential risks. The decision to wind down the CarOffer business is a challenge, but the company's strategic initiatives and growth guidance provide confidence in its future prospects.

Positive Factors

Dealer Count Expansion

U.S dealer count rose by 325, 50 ahead of expectation, and international dealer count was up impressively, rising by almost 400 dealers.

Market Position and Traffic

CarGurus remains the No. 1 most visited listing site in the U.S., with nearly 85 million average monthly sessions and 34 million unique visitors.

Revenue and EBITDA Performance

CARG delivered upside on both revenue and Adjusted EBITDA as the marketplace business remains robust.

Negative Factors

Business Restructuring

A major development in the quarter was the strategic decision to wind down the transaction side of the CarOffer business.

Competitive Risks

Competitive risk from Amazon remains an overhang.

International Investment Impact

The margin expansion trajectory is likely to slow due to greater marketing and international product investments.

CarGurus Business Overview & Revenue Model

Company Description

CarGurus (CARG) is an online automotive marketplace that connects buyers and sellers of new and used vehicles. Founded in 2006, the company operates primarily in the automotive sector, offering a platform that provides users with detailed vehicle listings, pricing insights, and dealer reviews. CarGurus aims to simplify the car-buying process for consumers by leveraging technology and data analytics to deliver transparent information and facilitate informed purchasing decisions.

How the Company Makes Money

CarGurus generates revenue primarily through advertising and subscription services. The company earns money by charging dealerships for premium placement of their vehicle listings on the CarGurus platform, which enhances visibility and attracts more potential buyers. Additionally, CarGurus offers subscription-based services to dealerships, providing them with tools and analytics to optimize their inventory management and marketing strategies. The company also partners with third-party service providers to offer financing and insurance options, generating referral fees from these partnerships. Overall, CarGurus' revenue model is heavily reliant on its relationships with automotive dealerships and the effectiveness of its platform in driving sales.

CarGurus Financial Statement Overview

Summary

CarGurus presents a strong financial profile with high profitability and efficient cash flow management. While revenue growth has been inconsistent, the company maintains healthy margins and a solid balance sheet. The moderate leverage and strong return on equity highlight effective financial management, though attention to debt levels is warranted.

Income Statement

CarGurus shows strong profitability with a high gross profit margin of 85.48% and a net profit margin of 14.12% in the TTM period. Revenue growth is modest at 1.70%, indicating a stable revenue base. The EBIT and EBITDA margins are healthy, suggesting efficient operations. However, the revenue growth rate has fluctuated in recent years, which could indicate potential volatility.

Balance Sheet

The company's balance sheet is solid with a manageable debt-to-equity ratio of 0.45, indicating moderate leverage. Return on equity is strong at 27.87%, reflecting effective use of equity to generate profits. The equity ratio is not explicitly provided, but the company appears to maintain a balanced capital structure. The increase in debt levels over time could pose a risk if not managed carefully.

Cash Flow

CarGurus demonstrates robust cash flow management with a significant free cash flow growth rate of 16.67% in the TTM period. The operating cash flow to net income ratio of 2.81 indicates strong cash generation relative to earnings. The free cash flow to net income ratio of 0.94 suggests efficient conversion of earnings into cash. Overall, cash flow metrics are a strong point for the company.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	919.09M	894.38M	914.24M	1.66B	951.37M	551.45M
Gross Profit	785.63M	738.95M	651.45M	657.55M	657.36M	508.75M
EBITDA	183.81M	173.27M	81.10M	167.76M	200.01M	104.62M
Net Income	129.78M	20.97M	31.10M	193.78M	109.24M	77.55M
Balance Sheet
Total Assets	726.12M	824.54M	918.93M	927.10M	931.57M	502.30M
Cash, Cash Equivalents and Short-Term Investments	231.23M	304.19M	312.09M	469.52M	321.94M	290.30M
Total Debt	195.21M	192.74M	194.39M	66.42M	70.70M	69.89M
Total Liabilities	290.64M	282.85M	302.07M	155.74M	251.93M	128.71M
Stockholders Equity	435.48M	541.69M	616.85M	734.61M	516.84M	373.59M
Cash Flow
Free Cash Flow	255.83M	180.32M	83.32M	238.84M	84.42M	149.21M
Operating Cash Flow	272.93M	255.49M	124.53M	256.11M	98.29M	156.74M
Investing Cash Flow	-44.07M	-72.97M	-61.56M	72.73M	-68.15M	-16.89M
Financing Cash Flow	-215.19M	-168.63M	-253.64M	-92.62M	17.81M	-10.09M

CarGurus Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 36.16
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: 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 36.16 is above the 20-day moving average (MA) of 33.13, above the 50-day MA of 33.21, and above the 200-day MA of 33.38, indicating a bullish trend. The MACD of 0.89 indicates Negative momentum. The RSI at 71.77 is Negative, neither overbought nor oversold. The STOCH value of 91.56 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CARG.

CarGurus Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ATHM	77 Outperform	$3.45B	16.81	6.05%	6.01%	-7.06%	-20.71%
EVER	74 Outperform	$859.51M	18.96	34.34%	―	92.91%	―
CARG	73 Outperform	$3.59B	29.13	29.24%	―	4.80%	―
Z	73 Outperform	$21.14B	―	-1.34%	―	15.31%	56.19%
Sector *	61 Neutral	$17.99B	12.87	-3.58%	2.97%	1.27%	-14.28%
NBIS	59 Neutral	$15.47B	71.23	4.95%	―	-95.06%	1.92%
TRUE	53 Neutral	$191.03M	―	-23.53%	―	11.66%	-4.69%

CarGurus Corporate Events

CarGurus Winds Down CarOffer Business Amid Market Volatility

On August 6, 2025, CarGurus announced its decision to wind down its CarOffer transactions business, including Dealer-to-Dealer and Instant Max Cash Offer products, due to the current volatile pricing environment. The company plans to complete this process in the second half of 2025, incurring costs between $14 million and $19 million. This strategic shift will allow CarGurus to concentrate on AI-powered inventory intelligence and consumer vehicle sourcing, aiming to enhance technology and analytics for smarter sourcing and pricing decisions. The company reported strong financial results for the second quarter of 2025, with a 14% increase in Marketplace revenue and a net income of $22.3 million, while also expanding its share repurchase authorization to $350 million.

CarGurus Holds Annual Stockholders Meeting on Key Proposals

On June 4, 2025, CarGurus, Inc. held its annual stockholders meeting to vote on several key proposals. The stockholders elected Class II directors, ratified the appointment of Ernst & Young LLP as independent auditors, approved executive compensation for 2024, and decided to hold annual advisory votes on executive compensation. These decisions reflect the company’s ongoing commitment to governance and transparency, potentially impacting its operational strategies and stakeholder relations.