Cars (CARS) AI Stock Analysis

• Market Cap: $647.73M
• Dividend Yield: N/A
• Average Volume (3M): 756.09K
• Price to Earnings (P/E): 15.3
• Beta (1Y): 1.37
• Revenue Growth: 2.24%
• EPS Growth: -57.33%
• Country: US
• Employees: 1,800
• Sector: Consumer Cyclical
• Sector Strength: 58
• Industry: Auto - Dealerships
• EPS (TTM): 0.37
• Shares Outstanding: 62,886,696
• 10 Day Avg. Volume: 647,272
• 30 Day Avg. Volume: 756,085
• PEG Ratio: 0.43
• Price to Book (P/B): 2.44
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 8.63
• Enterprise Value/Market Cap: 2.24
• Enterprise Value/Revenue: 0.50
• Enterprise Value/Gross Profit: 2.56
• Enterprise Value/Ebitda: 2.12
• 1Y Price Target: $17.80
• Price Target Upside: 72.82% 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 DealerClub acquisition could be a game changer for Cars Commerce by offering an end-to-end solution to manage the entire lifecycle of a vehicle on a unified technology platform.

Financial Strength

Strong free cash flow facilitated the repurchase of $22 million of shares, highlighting financial strength.

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

OEM Commitments

OEMs are slowing down their commitments, which could impact revenue growth in the near term.

Quarterly Performance

The sizeable miss in 4Q results was primarily due to a pullback in dealer spending as inventory levels normalized.

Revenue Growth Challenges

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

Cars Business Overview & Revenue Model

Company Description

Cars (CARS) is a leading digital automotive marketplace that connects car buyers with sellers, providing a comprehensive platform for consumers to research, discover, and purchase vehicles. The company operates within the automotive and digital advertising sectors, offering a suite of products and services including vehicle listings, dealer reviews, and automotive content. Cars (CARS) aims to enhance the car shopping experience by providing consumers with the tools and information necessary to make informed purchasing decisions.

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
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
718.00M	719.15M	689.18M	653.88M	623.68M	547.50M
	Gross Profit
565.11M	594.82M	566.98M	538.92M	509.48M	445.97M
	EBIT
47.21M	53.50M	54.12M	66.04M	48.34M	-887.33M
	EBITDA
167.88M	201.24M	151.53M	152.29M	151.57M	-785.28M
	Net Income Common Stockholders
45.39M	48.19M	118.44M	17.21M	10.79M	-817.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
31.43M	50.67M	39.20M	31.71M	39.07M	67.72M
	Total Assets
1.08B	1.11B	1.17B	1.02B	1.01B	1.08B
	Total Debt
0.00	455.29M	483.25M	472.38M	466.32M	583.90M
	Net Debt
-31.43M	404.62M	444.05M	440.67M	427.25M	516.18M
	Total Liabilities
593.77M	600.38M	680.34M	640.44M	640.27M	735.54M
	Stockholders Equity
489.92M	511.49M	492.11M	384.43M	366.93M	340.18M
Cash Flow		Free Cash Flow
146.10M	149.52M	115.84M	108.80M	118.81M	121.90M
	Operating Cash Flow
148.51M	152.52M	136.72M	128.51M	138.00M	138.62M
	Investing Cash Flow
-39.32M	-24.60M	-97.05M	-84.38M	-39.45M	-16.71M
	Financing Cash Flow
-106.27M	-115.96M	-31.75M	-51.49M	-127.20M	-67.73M

Cars Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 10.30
• 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 10.3 is below the 20-day moving average (MA) of 10.41, below the 50-day MA of 10.93, and below the 200-day MA of 15.10, indicating a bearish trend. The MACD of -0.14 indicates Negative momentum. The RSI at 43.18 is Neutral, neither overbought nor oversold. The STOCH value of 57.53 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	$647.73M	15.32	9.35%	―	2.24%	-57.33%
CRMT	67 Neutral	$406.24M	23.46	3.45%	―	-2.26%	―
CANG	67 Neutral	$501.27M	6.63	0.12%	―	40.31%	-204.86%
Sector *	62 Neutral	$6.82B	11.05	2.80%	4.32%	2.67%	-24.92%
RMBL	47 Neutral	$73.45M	―	-130.43%	―	-14.45%	78.09%
VRM	40 Neutral	$10.93M	―	-49.90%	―	-96.51%	77.24%
UXIN	40 Underperform	$697.43M	―	260.24%	―	9.33%	50.69%

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.