Cars (CARS) AI Stock Analysis

• Market Cap: $794.26M
• Dividend Yield: N/A
• Average Volume (3M): 736.29K
• Price to Earnings (P/E): 19.5
• Beta (1Y): 1.36
• Revenue Growth: 2.24%
• EPS Growth: -57.33%
• Country: US
• Employees: 1,800
• Sector: Communication Services
• Sector Strength: 79
• Industry: Auto - Dealerships
• EPS (TTM): 0.41
• Shares Outstanding: 62,886,696
• 10 Day Avg. Volume: 569,140
• 30 Day Avg. Volume: 736,289
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.45
• Enterprise Value/Revenue: 1.60
• Enterprise Value/Gross Profit: 2.04
• Enterprise Value/Ebitda: 6.85
• 1Y Price Target: $17.80
• Price Target Upside: 40.93% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6

• Rating: 72 Outperform
• Price Target: $14.00 ▲(10.85% Upside)

Cars.com demonstrates solid financial performance with strong cash flow and moderate valuation. However, uncertainties in revenue guidance and mixed technical indicators suggest caution. The company's growth in unique visitors and dealer count are positives but are counterbalanced by revenue uncertainties and pressured dealer revenue.

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 Performance

Cars Commerce is a solid excess cash flow generator and has been actively returning cash to shareholders via open market share repurchases.

Market Position

Cars Commerce gained market share in Q1/25 as dealer count increased by 44 sequentially to 19,250 dealers, representing the strongest quarter of sequential organic growth since mid-2022.

Negative Factors

Market Recognition

Cars Commerce has made significant progress on building an end-to-end platform to manage the entire retail lifecycle of a vehicle, which is not being properly recognized by the market.

OEM Commitments

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

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.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

The company shows strong cash flow generation and stable profitability margins, though leverage remains moderate. ROE improvements are noted, but slight contraction in profitability margins and modest revenue growth are concerns.

Income Statement

The company has a stable gross profit margin of approximately 78.7% in TTM, indicating effective cost management. However, the net profit margin shows a decline to 6.3% compared to 6.7% last year, reflecting reduced profitability. Revenue growth has been modest, with a slight decrease in TTM compared to the previous year annual data.

Balance Sheet

The debt-to-equity ratio is approximately 0.93, indicating moderate leverage. ROE improved to 9.3% in TTM, showing better returns on equity. The equity ratio is stable at around 45.2%, reflecting a balanced capital structure. However, the high level of debt remains a concern.

Cash Flow

Free cash flow increased by 21.3% in TTM, a strong indicator of cash generation capability. The operating cash flow to net income ratio is robust at 3.27, suggesting efficient cash operations. The company maintains strong free cash flow relative to net income at 3.22, highlighting good cash management.

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: Neutral
• Last Price: 12.63
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CARS, the sentiment is Neutral. The current price of 12.63 is below the 20-day moving average (MA) of 12.84, above the 50-day MA of 11.73, and below the 200-day MA of 14.29, indicating a neutral trend. The MACD of 0.24 indicates Positive momentum. The RSI at 51.77 is Neutral, neither overbought nor oversold. The STOCH value of 19.10 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for CARS.

Cars Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CARS	72 Outperform	$794.26M	19.53	9.35%	―	2.24%	-57.33%
CRMT	67 Neutral	$361.54M	21.21	3.45%	―	-2.26%	―
Sector *	55 Neutral	HK$63.39B	-0.67	-4.21%	5.33%	-2.16%	-18.87%
CANG	54 Neutral	$490.89M	6.63	0.12%	―	40.31%	-204.86%
RMBL	49 Neutral	$77.99M	―	-130.43%	―	-14.45%	78.09%
UXIN	41 Neutral	$766.95M	―	260.24%	―	―	―
VRM	38 Underperform	$144.11M	―	-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.