Cars (CARS) AI Stock Analysis

• Market Cap: $643.33M
• Dividend Yield: N/A
• Average Volume (3M): 875.12K
• Price to Earnings (P/E): 17.0
• Beta (1Y): 1.46
• Revenue Growth: 0.20%
• EPS Growth: -20.57%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 97
• Industry: Auto - Dealerships
• EPS (TTM): 0.48
• Shares Outstanding: 61,445,496
• 10 Day Avg. Volume: 1,057,317
• 30 Day Avg. Volume: 875,119
• PEG Ratio: -0.40
• Price to Book (P/B): 2.24
• Price to Sales (P/S): 1.59
• P/FCF Ratio: 7.65
• Enterprise Value/Market Cap: 1.84
• Enterprise Value/Revenue: 1.65
• Enterprise Value/Gross Profit: 2.08
• Enterprise Value/Ebitda: 6.96
• 1Y Price Target: $16.63
• Price Target Upside: 35.53% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 68 Neutral
• Price Target: $12.50 ▲(1.87% Upside)

Cars.com demonstrates strong financial performance with robust revenue growth and efficient cost management. The positive earnings call highlights record revenue and strategic initiatives, contributing to a high score. However, technical analysis indicates a bearish trend, and valuation metrics suggest the stock may be overvalued, which lowers the overall score.

Positive Factors

Revenue Growth

Record revenue growth reflects strong demand and effective business strategies, indicating a robust market position and potential for sustained growth.

AI Integration

AI integration enhances user experience and engagement, potentially driving higher conversion rates and long-term competitive advantage.

Dealer Network Expansion

Expanding dealer network strengthens market presence and provides a broader inventory, supporting revenue growth and platform attractiveness.

Negative Factors

Net Profit Margin Decline

Declining net profit margins indicate pressure on profitability, which could affect long-term financial health if not addressed.

OEM Revenue Challenges

Decreased OEM revenue highlights dependency on external partners and market conditions, posing a risk to revenue stability.

Free Cash Flow Decline

Declining free cash flow growth may limit reinvestment capabilities and affect long-term operational flexibility.

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 generates revenue primarily through transaction fees charged to dealerships for listing their vehicles on its platform, as well as through financing options that facilitate vehicle purchases. Additionally, the company earns revenue from advertising services offered to dealerships and automotive-related businesses looking to promote their products to a targeted audience. Strategic partnerships with financial institutions also contribute to its earnings by providing integrated financing solutions for customers, enhancing the overall value proposition of the marketplace.

Cars Financial Statement Overview

Summary

Cars.com shows strong revenue growth and efficient cost management, with high gross profit margins. However, there are challenges in net profit margins and return on equity, indicating some profitability issues. The balance sheet is stable with manageable leverage, and cash flow remains robust despite a slight decline in free cash flow growth.

Income Statement

The income statement shows a strong gross profit margin of 82.87% TTM, indicating efficient cost management. However, the net profit margin has decreased to 4.16% TTM from 6.70% in the previous year, suggesting some pressure on profitability. Revenue growth is robust at 26.8% TTM, reflecting strong sales performance.

Balance Sheet

The balance sheet reveals a moderate debt-to-equity ratio of 0.94 TTM, indicating manageable leverage. Return on equity has decreased to 6.11% TTM from 9.42% in the previous year, suggesting reduced profitability from equity. The equity ratio stands at 44.57% TTM, showing a stable capital structure.

Cash Flow

Cash flow analysis indicates a slight decline in free cash flow growth at -5.34% TTM, but the company maintains a strong operating cash flow to net income ratio of 1.24 TTM, demonstrating efficient cash generation relative to net income. The free cash flow to net income ratio is healthy at 0.93 TTM.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	719.77M	719.15M	689.18M	653.88M	623.68M	547.50M
Gross Profit	568.91M	594.82M	566.98M	538.92M	509.48M	445.97M
EBITDA	170.28M	201.24M	151.53M	152.29M	150.14M	-785.28M
Net Income	29.96M	48.19M	118.44M	17.21M	10.79M	-817.12M
Balance Sheet
Total Assets	1.07B	1.11B	1.17B	1.02B	1.01B	1.08B
Cash, Cash Equivalents and Short-Term Investments	55.07M	50.67M	39.20M	31.71M	39.07M	67.72M
Total Debt	451.21M	455.29M	483.25M	472.38M	466.32M	583.90M
Total Liabilities	593.82M	600.38M	680.34M	640.44M	609.18M	735.54M
Stockholders Equity	477.57M	511.49M	492.11M	384.43M	398.02M	340.18M
Cash Flow
Free Cash Flow	135.06M	149.52M	115.84M	108.80M	118.81M	121.90M
Operating Cash Flow	144.53M	152.52M	136.72M	128.51M	138.00M	138.62M
Investing Cash Flow	-40.88M	-24.60M	-97.05M	-84.38M	-39.45M	-16.71M
Financing Cash Flow	-97.47M	-115.96M	-31.75M	-51.49M	-127.20M	-67.73M

Cars Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 12.27
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• 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 12.27 is above the 20-day moving average (MA) of 11.61, above the 50-day MA of 11.29, and above the 200-day MA of 11.81, indicating a bullish trend. The MACD of 0.23 indicates Negative momentum. The RSI at 56.19 is Neutral, neither overbought nor oversold. The STOCH value of 65.96 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	68 Neutral	$643.33M	17.05	6.11%	―	0.20%	-20.57%
Sector *	60 Neutral	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
CANG	55 Neutral	$220.54M	―	-26.07%	―	1437.94%	-801.70%
CRMT	54 Neutral	$215.56M	―	-2.60%	―	2.07%	-117.52%
SDA	46 Neutral	$208.10M	―	-59.92%	―	―	―
UXIN	41 Neutral	$564.90M	-13.84	―	―	―	―
VRM	38 Underperform	$118.39M	-0.63	-52.02%	―	-81.31%	87.13%

Cars Corporate Events

Cars.com Announces Resignation of Chief Product Officer

Matthew Crawford, Chief Product and Innovation Officer at Cars.com Inc., has announced his resignation effective November 28, 2025, to pursue another opportunity. During the transition, Crawford will assist the company as it searches for his successor, indicating a period of change in the company’s leadership structure.