One-glance verdict
Undervalued
$66.80 our estimate vs market $34.70
Wall Street consensus: $42.00 (-37.1% lower than our fair-value estimate)
48% below our estimate, below the bear case
Fundamentals snapshot
CarGurus, Inc.
CARG · NMS · Communication Services · Internet Content & Information
Current price
$34.70
52-week range
$26.39 - $41.22
Market cap
$3.09B
Balance sheet
Healthy
26.77x Strong cushion
Net debt $63.01M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 7.4% last year.
- Reward Returns 53.5% on equity, ahead of 80% of its peers.
- Reward Free cash flow was positive in 10/10 years.
- Risk Insider ownership is only 3.0% (peer median: 6.3%).
What this company does
CarGurus, Inc.
CarGurus runs an online marketplace where people shop for cars, making most of its money by charging dealers subscription fees to list their vehicles. This business model is built on recurring revenue (predictable, ongoing payments from subscribers), which provides a more stable income stream than relying on commissions from individual car sales.
How the company got here
CarGurus was started in 2006 by Langley Steinert, who also co-founded the travel website TripAdvisor. The original idea was to make the car buying process more transparent by using data to show people if they were getting a good deal. This focus on data and deal ratings helped the company grow quickly, attracting both car shoppers and dealerships to its website. The company became publicly traded on the stock market in 2017 and has since acquired other car-related websites like Autolist and PistonHeads to expand its reach.
What it actually does
CarGurus runs an online marketplace where you can shop for new and used cars from thousands of different dealerships. For car buyers, the website is free to use and offers tools to compare prices, read reviews, and see if a car's price is fair based on similar vehicles in the market. For car dealers, CarGurus is a way to show their available cars to a huge audience of potential customers. The company also provides services to help dealers manage their inventory and even offers financing options for buyers through partnerships.
U.S. Marketplace
This is the company's main business and largest source of income, focused entirely on the United States. It makes money primarily by charging car dealerships subscription fees to list their cars on the CarGurus website and get access to potential buyers. Dealers can choose different subscription levels, with more expensive plans offering better visibility for their listings. This segment also includes revenue (money a company receives from selling its products or services) from car manufacturers who pay to advertise on the site.
International Marketplace
This part of the business operates similarly to the U.S. Marketplace but serves customers and dealers in other countries, primarily the United Kingdom and Canada. It also owns PistonHeads, a popular online community and marketplace for car enthusiasts in the U.K. While much smaller than the U.S. business, it represents an area for future growth. The way it makes money is the same: charging dealers for subscriptions to list their cars and selling advertising space.
Digital Wholesale
This segment was built around the acquisition of a company called CarOffer, which created a platform for car dealers to buy and sell cars from each other. Instead of selling to the public, this was a business-to-business service helping dealers manage their inventory (the cars they have for sale). However, CarGurus has been winding down this part of its business to focus more on its core marketplace. This shows a strategic shift to prioritize more profitable and stable parts of the company.
What management is betting on now
The company is heavily focused on using artificial intelligence (AI) to improve the car shopping experience for both buyers and dealers. For shoppers, this means new tools like an AI-powered assistant that can help with research and finding the right car. For dealers, CarGurus is offering more advanced software to help them price their cars competitively and manage their inventory more effectively. The goal is to become more than just a listing site and provide valuable tools and data that help dealers run their businesses and help consumers make confident decisions.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$45.91M
FY2024 Q4
$65.50M
FY2025 Q1
$65.64M
FY2025 Q2
$71.54M
FY2025 Q3
$69.80M
FY2025 Q4
$81.92M
FY2026 Q1
$69.46M
FY2026 Q2
$94.03M
Revenue
$250.97M
Net income
$49.19M
Diluted EPS
0.54
Operating cash flow
$94.59M
Free cash flow
$94.03M
Fetching…
Sources
Revenue
$243.56M
Net income
$32.23M
Diluted EPS
0.34
Operating cash flow
$69.85M
Free cash flow
$69.46M
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Sources
Revenue
$241.09M
Net income
$49.80M
Diluted EPS
0.51
Operating cash flow
$83.12M
Free cash flow
$81.92M
Fetching…
Sources
Revenue
$238.70M
Net income
$44.72M
Diluted EPS
0.45
Operating cash flow
$71.17M
Free cash flow
$69.80M
Fetching…
Sources
Revenue
$234.03M
Net income
$22.34M
Diluted EPS
0.22
Operating cash flow
$73.12M
Free cash flow
$71.54M
Fetching…
Sources
Revenue
$225.16M
Net income
$39.05M
Diluted EPS
0.37
Operating cash flow
$67.88M
Free cash flow
$65.64M
Fetching…
Sources
Revenue
$210.24M
Net income
$45.88M
Diluted EPS
0.43
Operating cash flow
$75.74M
Free cash flow
$65.50M
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Sources
Revenue
$231.36M
Net income
$22.51M
Diluted EPS
0.21
Operating cash flow
$56.20M
Free cash flow
$45.91M
Fetching…
Sources
Is it cheap or expensive?
Fair value $66.80 vs current price $34.70
Wall Street consensus is the average analyst price target: $42.00 (-37.1% lower than our fair-value estimate).
Our most-likely fair value is $66.80 a share — about 92.5% above today's price of $34.70, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $63.0M. Interest coverage 26.8x.
Net debt
$63.01M
Interest coverage
26.77x
CarGurus, Inc.'s profit covers its interest bill about 26.8 times over. which is stronger than every peer shown here and 2 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
CARG
BASELINE
CarGurus, Inc.
Total debt $185.14M Interest coverage 26.77x This is the baseline the peer rows are being compared against.
Total debt $447.12M Interest coverage 1.98x -93% vs CARG Carries about 13.5x less debt cushion than CARG.
Total debt $249.70M Interest coverage -6.57x -100% vs CARG This peer has almost no interest-payment cushion compared with CARG.
Total debt $2.47B Interest coverage 11.25x -58% vs CARG Carries about 2.4x less debt cushion than CARG.
Total debt $558.00M Interest coverage -1.78x -100% vs CARG This peer has almost no interest-payment cushion compared with CARG.
What you should know
The case for and against CARG
3 Rewards
1 Risk
Rewards
-
Revenue grew 7.4% last year.
-
Returns 53.5% on equity, ahead of 80% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
-
Insider ownership is only 3.0% (peer median: 6.3%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
17.89x
Forward P/E
11.48x
P/B
13.15x
P/S
3.20x
EV/EBITDA
11.66x
PEG ratio
0.74x
Profitability
How much profit each dollar creates
Gross margin
92.4%
Operating margin
25.3%
Net margin
18.2%
ROE
53.5%
ROA
25.0%
Health
Liquidity and balance-sheet strength
Debt / equity
0.70x
Current ratio
1.85x
Quick ratio
1.51x
Total debt
$185.14M
Total cash
$122.14M
Growth
How the business has been compounding
Revenue TTM
$974.32M
Revenue 5Y CAGR
-1.2%
EPS TTM
1.94
EPS 5Y CAGR
78.2%
Cash flow
How much cash the business throws off
Operating CF TTM
$318.72M
Free CF TTM
$288.90M
FCF margin
29.7%
Dividend
Shareholder payout
Yield
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Payout ratio
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Last ex-div date
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