Cars (CARS) AI Stock Analysis

• Market Cap: $779.17M
• Dividend Yield: N/A
• Average Volume (3M): 829.98K
• Price to Earnings (P/E): 18.3
• Beta (1Y): 1.35
• Revenue Growth: 2.24%
• EPS Growth: -57.33%
• Country: US
• Employees: 1,800
• Sector: Consumer Cyclical
• Sector Strength: 65
• Industry: Auto - Dealerships
• EPS (TTM): 0.37
• Shares Outstanding: 62,886,696
• 10 Day Avg. Volume: 650,728
• 30 Day Avg. Volume: 829,982
• PEG Ratio: -3.25
• Price to Book (P/B): 1.65
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.40
• Enterprise Value/Market Cap: 0.96
• Enterprise Value/Revenue: 0.26
• Enterprise Value/Gross Profit: 1.32
• Enterprise Value/Ebitda: 1.10
• 1Y Price Target: $17.80
• Price Target Upside: 44.36% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 78 Outperform
• Price Target: $14.00 ▲(13.54%Upside)

Cars has a strong financial foundation with robust cash flow and no debt, supporting future growth. Technical indicators suggest bullish momentum but warn of potential short-term pullback due to overbought conditions. Valuation is reasonable, though the lack of a dividend yield may deter some investors. Earnings call highlights growth and innovation but also reflects revenue uncertainties. Recent corporate events positively impact brand engagement and strategic positioning.

Positive Factors

Acquisitions

The recent acquisition of DealerClub adds a reputation-based dealer-to-dealer wholesale auction marketplace that strategically augments Cars.com's platform capabilities.

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 (CARS) primarily makes money through its digital advertising services. The company generates revenue by selling advertising products and solutions to automotive dealers, manufacturers, and other industry participants. Key revenue streams include dealer subscriptions, which provide access to premium listing services and marketing tools, as well as display advertising that appears on the company's platform. Additionally, Cars (CARS) earns revenue from data analytics services, offering insights and analytics to automotive businesses to help them optimize their marketing strategies. Significant partnerships with automotive manufacturers and financial institutions further bolster their revenue, enabling integrated marketing and financing solutions for car buyers.

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
EBITDA	201.24M	151.53M	152.29M	151.57M	-785.28M
Net Income	48.19M	118.44M	17.21M	10.79M	-817.12M
Balance Sheet
Total Assets	1.11B	1.17B	1.02B	1.01B	1.08B
Cash, Cash Equivalents and Short-Term Investments	50.67M	39.20M	31.71M	39.07M	67.72M
Total Debt	455.29M	483.25M	472.38M	466.32M	583.90M
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: Positive
• Last Price: 12.33
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 12.33 is above the 20-day moving average (MA) of 11.94, above the 50-day MA of 11.13, and below the 200-day MA of 14.50, indicating a neutral trend. The MACD of 0.43 indicates Negative momentum. The RSI at 59.72 is Neutral, neither overbought nor oversold. The STOCH value of 45.47 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CARS.

Cars Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CARS	78 Outperform	$779.17M	18.34	9.35%	―	2.24%	-57.33%
CRMT	67 Neutral	$473.07M	27.17	3.45%	―	-2.26%	―
CANG	64 Neutral	$537.59M	6.63	0.12%	―	40.31%	-204.86%
Sector *	62 Neutral	$16.79B	10.79	-7.01%	3.04%	1.73%	-25.15%
RMBL	48 Neutral	$99.57M	―	-130.43%	―	-14.45%	78.09%
UXIN	45 Neutral	$956.63M	―	260.24%	―	―	―
VRM	44 Neutral	$144.26M	―	-49.90%	―	-96.51%	77.24%

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.

The most recent analyst rating on (CARS) stock is a Hold with a $19.00 price target. To see the full list of analyst forecasts on Cars stock, see the CARS Stock Forecast page.

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.