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Carvana Co (CVNA)
NYSE:CVNA
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Carvana Co
(NYSE:CVNA)
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Rating:67Neutral
Price Target:
$392.00
▲(17.31% Upside)
Action:ReiteratedDate:02/19/26
The score is driven primarily by the materially improved financial performance (profitability, cash generation, and deleveraging) and strong, growth-oriented 2026 guidance from the earnings call. Offsetting this, technicals are currently bearish/weak and valuation is stretched with a very high P/E and no dividend support.
Positive Factors
Unit Growth & Scale
Sustained 43% unit growth to a record scale indicates durable demand traction and distribution efficiency. Scale increases selection and fixed-cost leverage, enabling per-unit margin improvement and supporting management's 3.0M unit target; this underpins multi-quarter margin and cash generation expansion.
Profitability & Cash Generation
Material positive operating and free cash flow in 2025, with free cash flow near net income, signals the business now converts profits into liquidity. Reliable cash generation supports reinvestment, debt reduction, and capacity to fund growth without recurring equity raises, strengthening financial flexibility over months.
Deleveraging & Funding Capacity
Marked deleveraging and ample liquidity, plus diversified loan purchase agreements, materially reduces refinancing and funding risk. Stronger credit metrics and third-party funding capacity permit growth and inventory financing at scale while limiting balance-sheet strain during normal cyclical swings.
Negative Factors
Elevated Reconditioning Costs
Persistent higher reconditioning costs reflect operational execution strain from rapid expansion. These non-vehicle costs directly pressure retail GPU and margins; until automation and manager experience scale across sites, per-unit profitability may remain impaired and slow durable margin recovery.
Earnings Quality & One-time Items
A large noncash tax benefit materially boosted reported net income, complicating assessment of recurring profitability. Given the firm's recent history of losses and volatile results, reliance on one-offs can mask operating volatility and makes forecasting sustainable EPS and cash conversion more uncertain over the next several quarters.
Higher Per‑Unit Marketing / SG&A
Elevated customer acquisition and other SG&A per unit can erode incremental margins if customer LTV or conversion efficiency doesn't improve. Sustained higher marketing and SG&A to drive growth may reduce free cash flow conversion and slow margin progress until unit economics demonstrably improve.
Carvana Co (CVNA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$73.13B
Dividend YieldN/A
Average Volume (3M)4.66M
Price to Earnings (P/E)34.1
Beta (1Y)2.47
Revenue Growth45.55%
EPS Growth5776.52%
CountryUS
Employees17,400
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)4.22
Shares Outstanding142,736,190
10 Day Avg. Volume5,467,478
30 Day Avg. Volume4,659,138
Financial Highlights & Ratios
PEG Ratio0.08
Price to Book (P/B)16.88
Price to Sales (P/S)2.86
P/FCF Ratio65.34
Enterprise Value/Market Cap0.97
Enterprise Value/Revenue3.48
Enterprise Value/Gross Profit16.88
Enterprise Value/Ebitda34.55
Forecast
1Y Price Target
$458.28Price Target Upside37.14% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering19
EPS Forecast (FY)7.37
Revenue Forecast (FY)$26.68B
Carvana Co Business Overview & Revenue Model
Company DescriptionCarvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. The company offers vehicle acquisition, inspection and reconditioning, online search and shopping experience, financing, complementary products, logistics network and distinctive fulfillment experience, and post-sale customer support services. It also operates auction sites. Carvana Co. was founded in 2012 and is based in Tempe, Arizona.
How the Company Makes MoneyCarvana generates revenue primarily through the sale of used vehicles, which is its main revenue stream. When a consumer purchases a car, Carvana charges a markup on the vehicle's price, which includes the cost of acquiring, reconditioning, and delivering the car. Additionally, the company earns money from fees associated with financing and vehicle trade-ins. Carvana also offers a subscription service that provides customers with a flexible vehicle usage option. Significant partnerships with financial institutions allow Carvana to offer competitive financing options, further enhancing its revenue potential. Furthermore, Carvana's innovative model reduces overhead costs associated with traditional dealerships, allowing for competitive pricing and improved margins.
Carvana Co Key Performance Indicators (KPIs)
Any
Revenue by Segment
Breaks down revenue from different business segments, highlighting which areas are driving growth and where the company might need to improve or expand.
Breaks down revenue from different business segments, highlighting which areas are driving growth and where the company might need to improve or expand.
Data provided by:
The Fly
The FlyCarvana Co Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 30, 2026
Earnings Call Sentiment Positive
The call presented a strongly positive operating and financial story: very large top-line and unit growth (43% units, 58% Q4 revenue), record adjusted EBITDA margin for the year, healthier leverage and cash positions, expanded financing capacity, and clear customer-experience improvements. Offsetting these positives were operational execution challenges localized to reconditioning that pressured non-vehicle costs and retail GPU in Q4 (with management expecting elevated reconditioning costs to continue into Q1 while remediation is enacted), plus some one-time accounting/tax benefits that boosted net income. On balance, the fundamentals (rapid scalable growth, improving profitability, strong balance sheet) dominate the call, while the operational issues appear manageable and being actively addressed.Q4-2025 Updates
Positive Updates
Strong Unit Growth and Company Records
Retail units sold grew 43% in 2025 to a record 596,641 units; Q4 retail units were 163,522, also up 43% YoY and a new company record. This marked the eighth consecutive quarter of industry-leading retail unit growth.
Revenue Expansion
Q4 revenue was $5.603 billion, an increase of 58% year-over-year (growth outpacing unit growth primarily due to traditional gross revenue treatment for certain vehicles).
Improved Profitability and Adjusted EBITDA
Full-year adjusted EBITDA margin reached a record 11%. Q4 adjusted EBITDA was $511 million (up $152 million YoY), with an adjusted EBITDA margin of 9.1%.
Material Net Income and One-Time Tax Benefit
Net income was $951 million in Q4, an increase of $792 million YoY. Results were positively impacted by a noncash deferred tax benefit (~$618 million) due to the release of a valuation allowance tied to the UP-C structure.
Strong Balance Sheet and Leverage Improvement
Ended 2025 with $2.3 billion in cash & equivalents, retired $709 million of corporate notes, and reduced net debt to trailing-12-month adjusted EBITDA ratio to 1.3x — the company’s strongest credit ratio to date.
Expanded Funding & Financing Capabilities
Expanded loan sale platform with a fourth loan purchase agreement for up to $4 billion through Dec 2027; total new partner loan purchase agreements of $12 billion over the next 2 years in addition to $6 billion with Ally through Oct 2026 (totaling $18 billion of committed loan purchase capacity).
Customer Experience & Selection Improvements
Customer selection increased by 20,000 cars year-over-year; delivery time to customers improved by one day on average; average customer shipping fees reduced by ~$60; customer interest rates on loans lowered by ~1% relative to benchmark; Net Promoter Score at multiyear highs. 30% of retail customers complete the purchase without speaking to a Carvana representative; 60% of sellers do likewise.
Operational Capacity and Infrastructure Progress
Company owns real estate capacity to support 3 million units per year, has facilities to produce ~1.5 million cars per year, and now operates 34 reconditioning locations. Integrated 10 additional ADESA locations and expanded digital auction capabilities nationwide.
Operational Efficiency Metrics
Reported operating ROA (operating income / operating assets) exceeding 20% at year-end 2025; management highlighted fixed cost leverage and fundamental gains expected to drive continued margin expansion toward long-term targets.
Negative Updates
Retail GPU Pressure
Non-GAAP retail GPU decreased by $255 in Q4 YoY, driven primarily by higher non-vehicle costs (notably elevated reconditioning), lower shipping fees passed to customers as cars are positioned closer to buyers, and higher retail depreciation rates.
Wholesale GPU Decline and Mixed GPU Dynamics
Non-GAAP wholesale GPU decreased by $148 YoY (partly due to faster growth in retail units versus wholesale marketplace units). Non-GAAP other GPU rose by $49, but overall GPU mix created headwinds to margin percent in Q4.
Elevated Reconditioning Costs and Execution Variability
Reconditioning costs were higher than expected in Q4 due to rapid growth, new/expanded sites operating with single lines, and newer managers at some locations. Management expects elevated reconditioning costs to persist into Q1 while remediation and automation efforts are implemented.
Quarterly Margin Rate Decline
Adjusted EBITDA margin for Q4 declined to 9.1% from 10.1% YoY (management attributes much of the percentage decline to increased gross revenue recognition for certain units rather than a decline in EBITDA dollars). Variable adjusted EBITDA margin decelerated to ~7% in the quarter.
Increased Per-Unit Advertising and Near-Term SG&A Headwinds
Advertising expense rose by $83 per retail unit sold in the quarter as the company invests to build awareness and adoption. Management also expects non-vehicle costs to be up YoY in Q1 as part of scaling and operational choices.
Net Income Influenced by One-Time Tax Accounting Items
A sizable portion of the Q4 net income improvement was driven by a noncash deferred tax benefit arising from release of a valuation allowance on UP-C related tax assets; management disclosed a tax receivable liability reflecting sharing of those benefits with pre-IPO LLC unitholders — signaling part of the profit improvement is nonrecurring.
Company Guidance
Carvana guided to “significant growth” in both retail units sold and adjusted EBITDA for full‑year 2026, explicitly calling for a sequential increase in both metrics in Q1 2026, while reaffirming its long‑term targets of 3.0 million retail units per year and a 13.5% adjusted EBITDA margin (noting fixed‑cost leverage alone could add ~2 percentage points of margin over time); the company pointed to its 2025 base of 596,641 retail units (up 43%) and Q4 retail units of 163,522 (also +43%), Q4 revenue of $5.603B (+58%), Q4 adjusted EBITDA of $511M (9.1% margin) and a record full‑year adjusted EBITDA margin of 11%, and said it expects non‑vehicle costs to be up year‑over‑year in Q1 but still projects a sequential increase in retail GPU in Q1; balance sheet support for the plan includes $2.3B cash, $709M of corporate notes retired, a net debt / TTM adjusted EBITDA ratio of 1.3x, and loan purchase capacity totaling up to $12B from new partners over two years plus $6B with Ally through October 2026.Carvana Co Financial Statement Overview
Summary
Strong turnaround with solid 2025 profitability (net margin ~6.9%), healthy gross margin (~20.6%), meaningful deleveraging by 2025 (debt-to-equity ~0.18), and strong 2025 operating cash flow ($1.0B) and free cash flow ($0.9B). Main risk is the short track record and historical volatility (recent period included heavy losses, negative equity, and negative cash flow).Income Statement
Profitability has improved meaningfully versus the 2021–2022 loss period, with 2025 showing solid net profitability (net margin ~6.9%) and healthy gross margin (~20.6%). Revenue growth re-accelerated in 2025 (~11.3%) after a weak/declining 2023 and minimal growth in 2024, signaling improving demand/throughput. The main weakness is volatility: the business has swung from heavy losses (2022) to strong profits (2025), and margins have not been consistently stable across the cycle.74
Positive
Balance Sheet
The balance sheet shows a major deleveraging inflection: total debt drops sharply by 2025 (debt-to-equity ~0.18) versus very high leverage in 2023–2024 and even negative equity in 2022. Equity has rebuilt to a much stronger base by 2025, supporting a high return on equity (~40.9%). Key risk is the historical instability—very high leverage and thin/negative equity were present recently, which highlights that the current strength is relatively new and should be monitored for durability.78
Positive
Cash Flow
Cash generation is now a clear positive, with 2025 producing strong operating cash flow ($1.0B) and free cash flow ($0.9B), and a large free-cash-flow growth rate (~62.8%) versus 2024. Free cash flow is also largely supported by reported profits (free cash flow is ~86% of net income in 2025). The weakness is that cash conversion is not perfect (operating cash flow is below net income in 2025), and the company had materially negative operating and free cash flow in 2020–2022, underscoring cyclicality and execution risk.72
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 20.32B | 13.67B | 10.77B | 13.60B | 12.81B |
| Gross Profit | 4.19B | 2.71B | 1.72B | 1.00B | 1.83B |
| EBITDA | 2.16B | 1.36B | 1.16B | -2.15B | -5.00M |
| Net Income | 1.41B | 210.00M | 450.00M | -1.59B | -135.00M |
Balance Sheet | |||||
| Total Assets | 13.20B | 8.48B | 7.07B | 8.70B | 7.01B |
| Cash, Cash Equivalents and Short-Term Investments | 2.33B | 2.18B | 896.00M | 755.00M | 785.00M |
| Total Debt | 633.00M | 6.05B | 6.71B | 8.82B | 5.77B |
| Total Liabilities | 9.00B | 7.11B | 7.46B | 9.75B | 6.49B |
| Stockholders Equity | 3.44B | 1.26B | 243.00M | -518.00M | 306.00M |
Cash Flow | |||||
| Free Cash Flow | 889.00M | 827.00M | 716.00M | -1.84B | -3.15B |
| Operating Cash Flow | 1.04B | 918.00M | 803.00M | -1.32B | -2.59B |
| Investing Cash Flow | -230.00M | -13.00M | 31.00M | -2.58B | -627.00M |
| Financing Cash Flow | -137.00M | 261.00M | -868.00M | 3.90B | 3.53B |
Carvana Co Technical Analysis
Negative
334.16
Price Trends
414.47
Negative
384.95
Negative
365.00
Negative
Market Momentum
-24.43
Positive
38.35
Neutral
51.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CVNA, the sentiment is Negative. The current price of 334.16 is below the 20-day moving average (MA) of 365.46, below the 50-day MA of 414.47, and below the 200-day MA of 365.00, indicating a bearish trend. The MACD of -24.43 indicates Positive momentum. The RSI at 38.35 is Neutral, neither overbought nor oversold. The STOCH value of 51.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CVNA.
Carvana Co Risk Analysis
Carvana Co disclosed 41 risk factors in its most recent earnings report. Carvana Co reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Carvana Co Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | $73.13B | 34.14 | 59.86% | ― | 45.55% | 5776.52% | |
63 Neutral | $62.22B | 26.19 | ― | ― | 3.81% | -4.26% | |
62 Neutral | $79.24B | 31.68 | ― | ― | 6.19% | 6.98% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $6.12B | 14.28 | 7.46% | ― | 0.12% | 2.78% | |
58 Neutral | $6.77B | 11.44 | 27.05% | ― | 6.06% | -1.71% | |
48 Neutral | $3.20B | 73.23 | 3.11% | 2.53% | -19.41% | -957.94% |
* Consumer Cyclical Sector Average
CVNA
Carvana Co
334.16
114.71
52.27%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.