Cars (CARS) AI Stock Analysis

• Market Cap: $670.37M
• Dividend Yield: N/A
• Average Volume (3M): 886.82K
• Price to Earnings (P/E): 15.1
• Beta (1Y): 1.34
• Revenue Growth: 2.24%
• EPS Growth: -57.33%
• Country: US
• Employees: 1,800
• Sector: Consumer Cyclical
• Sector Strength: 74
• Industry: Auto - Dealerships
• EPS (TTM): 0.37
• Shares Outstanding: 62,886,696
• 10 Day Avg. Volume: 1,051,450
• 30 Day Avg. Volume: 886,815
• PEG Ratio: 0.59
• Price to Book (P/B): 1.33
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 4.57
• Enterprise Value/Market Cap: 1.59
• Enterprise Value/Revenue: 0.37
• Enterprise Value/Gross Profit: 2.20
• Enterprise Value/Ebitda: 1.61
• 1Y Price Target: $18.60
• Price Target Upside: 82.00% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 74 Outperform
• Price Target: ―

Cars.com showcases strong financial health with a robust balance sheet and cash flow, despite a declining net profit margin. Technical analysis indicates bearish momentum, presenting short-term risks. The company's valuation remains reasonable, supported by strategic initiatives and positive corporate events. However, mixed earnings call sentiment and uncertainties in revenue guidance pose potential challenges.

Positive Factors

Acquisition Impact

The completion of the DealerClub acquisition could be a game changer for Cars Commerce, providing an end-to-end solution to manage the entire lifecycle of a vehicle.

Market Position

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

Negative Factors

Financial Performance

CARS delivered 4Q24 revenue of $180.4MM, missing the Street's $183.8MM as well as the low of guidance which was ~$181.5MM.

Revenue Growth

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

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 makes money primarily through its online advertising model, where automotive dealers and manufacturers pay for listing their vehicles on the platform. The company's revenue streams include dealer subscription fees for premium listings, display advertising, and lead generation services that connect potential buyers with dealers. Additionally, Cars generates income from its data analytics services, which offer insights into consumer behavior and market trends, helping car dealers optimize their sales strategies. Strategic partnerships with automotive manufacturers and financial institutions also contribute to the company's earnings by expanding its reach and enhancing its service offerings.

Cars Financial Statement Overview

Summary

Cars demonstrates an impressive financial position supported by a strong balance sheet and robust cash flow generation. While revenue growth and operating efficiency are evident, the decline in net profit margin highlights potential cost pressures or competitive challenges. The elimination of debt and solid cash flow metrics position the company well for future growth and stability in the dynamic vehicles industry.

Income Statement

The company has demonstrated strong revenue growth with a 4.35% increase from the previous year and consistent gross profit margins of over 80%. However, net profit margin has declined significantly from 17.19% to 6.70%, indicating increased costs or reduced pricing power. EBITDA and EBIT margins remain stable, reflecting operational efficiency.

Balance Sheet

The balance sheet is robust with a significant improvement in debt position, moving to zero total debt, enhancing financial stability. The equity ratio is strong at 45.99%, and ROE is healthy at 9.42%, indicating good returns for shareholders. The improvement in stockholders' equity over time reflects strong financial health.

Cash Flow

Cash flow from operations has increased by 11.56%, indicating strong cash generation. Free cash flow has grown by 29.03%, enhancing liquidity. The company exhibits a high operating cash flow to net income ratio, suggesting effective conversion of income into cash. Stability in cash flow is a positive indicator for financial resilience.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
719.15M	689.18M	653.88M	623.68M	547.50M
	Gross Profit
594.82M	566.98M	538.92M	509.48M	445.97M
	EBIT
53.50M	54.12M	66.04M	48.34M	7.33M
	EBITDA
201.24M	151.53M	161.43M	151.57M	-796.38M
	Net Income Common Stockholders
48.19M	118.44M	17.21M	7.72M	-817.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
50.67M	39.20M	31.71M	39.07M	67.72M
	Total Assets
1.11B	1.17B	1.02B	1.01B	1.08B
	Total Debt
455.29M	483.25M	472.38M	466.32M	583.90M
	Net Debt
404.62M	444.05M	440.67M	427.25M	516.18M
	Total Liabilities
600.38M	680.34M	640.44M	640.27M	735.54M
	Stockholders Equity
511.49M	492.11M	384.43M	366.93M	340.18M
Cash Flow		Free Cash Flow
149.52M	115.84M	108.80M	118.81M	121.90M
	Operating Cash Flow
152.52M	136.72M	128.51M	138.00M	138.62M
	Investing Cash Flow
-24.60M	-97.05M	-84.38M	-39.45M	-16.71M
	Financing Cash Flow
-115.96M	-31.75M	-51.49M	-127.20M	-67.73M

Cars Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 10.22
• 50DMA: Negative
• 100DMA: Negative
• 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 Negative. The current price of 10.22 is below the 20-day moving average (MA) of 11.23, below the 50-day MA of 11.33, and below the 200-day MA of 15.68, indicating a bearish trend. The MACD of -0.30 indicates Positive momentum. The RSI at 35.97 is Neutral, neither overbought nor oversold. The STOCH value of 40.25 is Neutral, 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	74 Outperform	$670.37M	15.07	9.35%	―	2.24%	-57.33%
CRMT	67 Neutral	$421.15M	53.45	1.50%	―	-2.26%	―
Sector *	62 Neutral	$6.97B	11.36	2.77%	3.91%	2.66%	-22.00%
CANG	58 Neutral	$450.42M	6.63	0.12%	―	40.31%	-204.86%
RMBL	48 Neutral	$77.23M	―	-130.43%	―	-14.45%	78.09%
UXIN	40 Underperform	$853.45M	―	260.24%	―	9.33%	50.69%
VRM	38 Underperform	$10.93M	―	-49.90%	―	-96.51%	77.24%

Cars Corporate Events

Cars’ Accidental Newsletter Highlights Q1 Achievements

On April 17, 2025, Cars inadvertently sent an internal marketing newsletter to an external mailing list, revealing significant achievements in Q1, including a record number of unique visitors on Cars.com and a successful LinkedIn event discussing tariffs. The company highlighted its strategic initiatives, such as the AccuTrade appraisal tool and DealerClub, to capitalize on market shifts due to tariffs. These efforts have resulted in increased engagement and brand growth, positioning Cars as a leader in the automotive digital marketing space.

Cars Commerce Announces Leadership Transition for 2025

Doug Miller, President and Chief Commercial Officer of Cars Commerce, will depart the company by March 31, 2025, with Lisa Gosselin appointed as his successor effective February 24, 2025. Gosselin, with over 25 years of experience in SaaS, adtech, and data, is expected to enhance Cars Commerce’s platform and growth strategy, focusing on optimizing go-to-market strategies and driving revenue growth.