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Cars.com, Inc. (CARS)
NYSE:CARS
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Cars (CARS) AI Stock Analysis

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CARS

Cars

(NYSE:CARS)

Rating:71Outperform
Price Target:
$14.50
▲(10.69% Upside)
The overall stock score is driven by strong earnings call highlights, including dealer and OEM revenue growth, and positive technical indicators. Financial performance shows stable margins but declining profitability and revenue growth, which are concerns. Valuation is moderate, with no dividend yield to attract income investors.
Positive Factors
Customer Growth
The company saw the best sequential growth in dealer customers in over three years, with an increase of 162 dealer customers to 19,412.
Financial Strength
Strong free cash flow facilitated the repurchase of $22 million of shares, highlighting financial strength.
Strategic Partnerships
AccuTrade signed an enterprise-level deal with a major independent dealer group, expanding into 150 total stores by the end of 2025.
Negative Factors
Market Recognition
Cars Commerce has made significant progress on building an end-to-end platform to manage the entire retail lifecycle of a vehicle, which is not being properly recognized by the market.
OEM Commitments
OEMs are slowing down their commitments, which could impact revenue growth in the near term.
Revenue Growth
Revenue growth remains sluggish with no relief due to tariff uncertainty, capping potential stock appreciation.

Cars (CARS) vs. SPDR S&P 500 ETF (SPY)

Cars Business Overview & Revenue Model

Company DescriptionCars.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 MoneyCars 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 Earnings Call Summary

Earnings Call Date:Aug 07, 2025
(Q2-2025)
|
% Change Since: -0.23%|
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a balance of positive growth in dealer count, OEM revenue, and consumer engagement with challenges such as dealer revenue softness and tariff uncertainties. Despite a decline in net income, the company showed progress with AI features and increased share buyback commitments.
Q2-2025 Updates
Positive Updates
Strong Dealer Growth
Dealer count increased to 19,412, a rise of 162 customers quarter-over-quarter, marking the best organic performance since the start of 2022.
OEM Revenue Growth
OEM and national revenue grew 5% year-over-year in Q2, despite the uncertainty around tariffs.
Traffic and Consumer Engagement
Traffic hit a new second quarter record of 162 million, up 2% year-over-year, with average monthly unique visitors increasing to 26.6 million.
AccuTrade Expansion
AccuTrade grew its subscriber base to 1,070 dealers, with appraisal activity reaching 925,000 appraisals in Q2, up 14% quarter-over-quarter.
Enhanced AI Features
New AI-powered search capabilities led to lead submission rates that are 2x higher than regular search, accounting for nearly 20% of Internet leads submitted.
Share Buyback Commitment
Cars.com repurchased $23 million of shares in Q2 and raised their full year share repurchase target to $70 million to $90 million.
Negative Updates
Softness in Dealer Revenue
Dealer revenue was down 1% year-over-year due to slightly lower ARPD and customer mix.
Tariff Impacts
Persistent uncertainty around tariffs affected OEM investment levels and caused fluctuations in advertising investments.
Net Income Decline
Net income for the second quarter was $7 million, down from $11 million a year ago.
ARPD Decline
ARPD in the second quarter was $2,435, down around $40 both year-over-year and sequentially.
Company Guidance
During the Cars.com Second Quarter 2025 Earnings Call, the company provided guidance for the remainder of the year, emphasizing their expectation for low single-digit year-over-year revenue growth in the second half of 2025. This growth is anticipated to be driven by initiatives such as the launch of new marketplace Premium and Premium Plus packages and enhanced sales velocity. The company achieved a dealer count of 19,412, adding over 160 dealers quarter-over-quarter, marking their best sequential organic growth in over three years. Despite temporary softness in dealer revenue, OEM and national revenue grew by 5% year-over-year. Cars.com reported a record traffic of 162 million, up 2% year-over-year, with average monthly unique visitors reaching 26.6 million. Adjusted EBITDA margin was at 28.5%, at the high end of their outlook range, and they have increased their full-year share repurchase target to $70 million to $90 million. The company also highlighted the potential for continued acceleration into 2026, driven by product innovations, including new AI-powered search capabilities that resulted in lead submission rates twice as high as regular searches.

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
72
Positive
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
65
Positive
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
68
Positive
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue717.85M719.15M689.18M653.88M623.68M547.50M
Gross Profit593.02M594.82M366.39M538.92M509.48M445.97M
EBITDA188.62M201.24M151.53M152.29M144.44M-796.38M
Net Income41.02M48.19M118.44M17.21M10.79M-817.12M
Balance Sheet
Total Assets1.06B1.11B1.17B1.02B1.01B1.08B
Cash, Cash Equivalents and Short-Term Investments27.70M50.67M39.20M31.71M39.07M67.72M
Total Debt455.90M455.29M483.25M500.88M466.32M583.90M
Total Liabilities581.44M600.38M680.34M640.44M640.27M735.54M
Stockholders Equity483.22M511.49M492.11M384.43M366.93M340.18M
Cash Flow
Free Cash Flow142.68M149.52M115.84M108.80M118.81M121.90M
Operating Cash Flow139.49M152.52M136.72M128.51M138.00M138.62M
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
Positive
Last Price13.10
Price Trends
50DMA
12.42
Positive
100DMA
11.68
Positive
200DMA
14.05
Negative
Market Momentum
MACD
0.10
Negative
RSI
54.88
Neutral
STOCH
77.92
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CARS, the sentiment is Positive. The current price of 13.1 is above the 20-day moving average (MA) of 12.66, above the 50-day MA of 12.42, and below the 200-day MA of 14.05, indicating a neutral trend. The MACD of 0.10 indicates Negative momentum. The RSI at 54.88 is Neutral, neither overbought nor oversold. The STOCH value of 77.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CARS.

Cars Risk Analysis

Cars disclosed 36 risk factors in its most recent earnings report. Cars 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

Cars Peers Comparison

Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$794.49M21.058.37%0.68%67.41%
67
Neutral
$383.83M22.123.45%-0.21%
60
Neutral
$43.56B3.79-13.01%4.09%1.89%-42.25%
57
Neutral
$519.98M6.630.12%40.31%-204.86%
51
Neutral
$130.90M-246.90%-14.27%67.06%
44
Neutral
$806.12M260.24%
42
Neutral
$146.32M-45.88%-90.19%79.52%
* Communication Services Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CARS
Cars
13.10
-4.40
-25.14%
CRMT
America's Car-Mart
46.10
-15.16
-24.75%
RDNW
RideNow Group
3.48
-1.06
-23.35%
UXIN
Uxin
3.91
2.38
155.56%
CANG
Cango
4.91
3.19
185.47%
VRM
Vroom, Inc.
28.14
3.50
14.20%

Cars Corporate Events

Shareholder Meetings
Cars.com Inc. Approves Key Proposals at Annual Meeting
Neutral
Jun 6, 2025

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.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Aug 23, 2025