Cars (CARS) AI Stock Analysis

• Market Cap: $675.90M
• Dividend Yield: N/A
• Average Volume (3M): 875.12K
• Price to Earnings (P/E): 17.9
• Beta (1Y): 1.47
• Revenue Growth: 0.68%
• EPS Growth: 67.41%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 97
• Industry: Auto - Dealerships
• EPS (TTM): 0.41
• Shares Outstanding: 61,445,496
• 10 Day Avg. Volume: 1,057,317
• 30 Day Avg. Volume: 875,119
• 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: 1.75
• Enterprise Value/Revenue: 1.65
• Enterprise Value/Gross Profit: 2.00
• Enterprise Value/Ebitda: 6.28
• 1Y Price Target: $17.60
• Price Target Upside: 60.00% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5

• Rating: 63 Neutral
• Price Target: $11.00 ▲(0.00% Upside)

Cars.com shows a stable financial position with strong gross profit margins and effective cash conversion. However, declining revenue growth and profitability are concerns. The technical indicators suggest a bearish trend, and the valuation is moderate. The earnings call provided some positive insights, particularly in dealer growth and AI advancements, but challenges remain with dealer revenue softness and tariff impacts.

Positive Factors

Strong Dealer Growth

The increase in dealer count indicates robust platform adoption and strengthens Cars' market position, enhancing its long-term revenue potential.

Enhanced AI Features

AI innovations improve user experience and lead generation, potentially increasing sales conversion rates and driving sustainable growth.

OEM Revenue Growth

Growth in OEM revenue reflects strong partnerships and demand, supporting Cars' diversified revenue streams and long-term financial health.

Negative Factors

Declining Revenue Growth

Negative revenue growth poses a challenge to future earnings potential, indicating potential market saturation or competitive pressures.

Net Income Decline

A decline in net income suggests reduced profitability, which could impact Cars' ability to invest in growth and innovation over time.

Softness in Dealer Revenue

Decreased dealer revenue indicates challenges in maintaining dealer engagement and pricing power, potentially affecting long-term revenue stability.

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 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 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

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	717.85M	719.15M	689.18M	653.88M	623.68M	547.50M
Gross Profit	593.02M	594.82M	366.39M	538.92M	509.48M	445.97M
EBITDA	188.62M	201.24M	151.53M	152.29M	144.44M	-796.38M
Net Income	41.02M	48.19M	118.44M	17.21M	10.79M	-817.12M
Balance Sheet
Total Assets	1.06B	1.11B	1.17B	1.02B	1.01B	1.08B
Cash, Cash Equivalents and Short-Term Investments	27.70M	50.67M	39.20M	31.71M	39.07M	67.72M
Total Debt	455.90M	455.29M	483.25M	500.88M	466.32M	583.90M
Total Liabilities	581.44M	600.38M	680.34M	640.44M	640.27M	735.54M
Stockholders Equity	483.22M	511.49M	492.11M	384.43M	366.93M	340.18M
Cash Flow
Free Cash Flow	142.68M	149.52M	115.84M	108.80M	118.81M	121.90M
Operating Cash Flow	139.49M	152.52M	136.72M	128.51M	138.00M	138.62M
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: Negative
• Last Price: 11.00
• 50DMA: Negative
• 100DMA: Negative
• 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 Negative. The current price of 11 is below the 20-day moving average (MA) of 11.10, below the 50-day MA of 12.23, and below the 200-day MA of 12.68, indicating a bearish trend. The MACD of -0.38 indicates Negative momentum. The RSI at 43.56 is Neutral, neither overbought nor oversold. The STOCH value of 79.09 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	―	$675.90M	17.91	8.37%	―	0.68%	67.41%
Sector *	―	$48.67B	4.58	-11.27%	4.14%	2.83%	-41.78%
CANG	―	$717.92M	-1.11	-31.61%	―	348.38%	-1821.85%
CRMT	―	$199.17M	15.48	2.54%	―	0.79%	―
SDA	―	$213.04M	―	-59.92%	―	―	―
UXIN	―	$548.41M	-13.43	―	―	―	―
VRM	―	$135.76M	―	-45.88%	―	-90.19%	79.52%

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.

The most recent analyst rating on (CARS) stock is a Buy with a $16.00 price target. To see the full list of analyst forecasts on Cars stock, see the CARS Stock Forecast page.

Cars.com Earnings Call: Growth Amid Challenges

The recent earnings call for Cars.com, Inc. presented a balanced sentiment, highlighting both achievements and challenges faced by the company. On the positive side, the company reported revenue growth in its OEM and national segments, dealer expansion, and improved marketplace performance. However, these gains were tempered by challenges such as dealer revenue softness, uncertainty in OEM advertising investments, and a decline in net income. Despite these hurdles, Cars.com shows promise with strong growth initiatives and strategic changes.

Cars.com Reports Steady Q2 2025 Performance

Cars.com, Inc., operating as Cars Commerce Inc., is a technology company in the automotive sector, offering a platform that simplifies car buying and selling through various digital solutions and AI-driven technologies.