One-glance verdict
Undervalued
$95.42 our estimate vs market $32.18
Wall Street consensus: $41.27 (-56.7% lower than our fair-value estimate)
66% below our estimate, below the bear case
Fundamentals snapshot
CarGurus, Inc.
CARG · NMS · Communication Services · Internet Content & Information
Current price
$32.18
52-week range
$26.39 - $41.22
Market cap
$2.87B
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 2.8% (peer median: 6.2%).
What this company does
CarGurus, Inc.
CarGurus helps people buy and sell cars online by connecting shoppers with dealerships. Their main income comes from dealerships paying to list cars and from car manufacturers advertising on their site, which is important because it shows how much they can make from their online marketplace.
How the company got here
CarGurus started in 2005 as an online platform aimed at making car shopping easier and more transparent for consumers. The company's founders recognized that buying a car could be a confusing and often frustrating experience, with a lack of clear pricing information. By creating a marketplace that aggregates listings from dealers and provides valuable data, CarGurus aimed to empower shoppers. The company officially changed its name from CarGurus LLC to CarGurus, Inc. in June 2015, marking its transition and growth in the online automotive space.
What it actually does
CarGurus operates an online marketplace that connects people looking to buy cars with dealerships that have vehicles for sale. Think of it like a giant digital showroom where you can browse cars from many different dealers all in one place. They also offer tools to help make the car buying and selling process smoother, like features that let you start your purchase online or get trade-in offers. Essentially, they provide a platform for both car shoppers and dealers to interact and conduct business more efficiently.
Dealer Services
This is a major way CarGurus makes money. Dealers pay subscription fees to list their inventory on the CarGurus platform and to access tools that help them manage their sales and pricing. These tools might include software that analyzes real-time consumer demand to help dealers set competitive prices for their vehicles. By subscribing, dealers gain access to a large pool of potential car buyers actively searching on CarGurus, helping them sell more cars.
Advertising and Partnerships
CarGurus also generates revenue by selling advertising space on its website and apps to auto manufacturers and other brand advertisers. These advertisers use the platform to promote their vehicles or related products to car shoppers. Additionally, CarGurus partners with financing services companies, likely earning referral fees or commissions when a car buyer uses one of these partners to finance their purchase, adding another income stream to the business.
International Marketplaces
Beyond the United States, CarGurus operates online automotive marketplaces in several other countries. This includes platforms like PistonHeads in the UK, which serves as a marketplace, auction site, and editorial resource for car enthusiasts. By expanding internationally, CarGurus aims to replicate its success in connecting car buyers and sellers across different global markets, diversifying its revenue base.
What management is betting on now
CarGurus is focused on enhancing its digital tools to make the entire car buying and selling process more seamless for consumers, from initial search to final purchase. They are investing in technology that helps dealers price vehicles effectively and attract buyers, while also providing shoppers with more options to start their transactions online. The company is also likely looking to grow its international presence and explore new partnerships to broaden its reach and revenue streams in the evolving automotive market.
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
Fetching…
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
Fetching…
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 $95.42 vs current price $32.18
Wall Street consensus is the average analyst price target: $41.27 (-56.7% lower than our fair-value estimate).
Our most-likely fair value is $95.42 a share — about 196.5% above today's price of $32.18, 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 2.8% (peer median: 6.2%).
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)
17.12x
Forward P/E
10.64x
P/B
10.88x
P/S
2.96x
EV/EBITDA
10.74x
PEG ratio
0.69x
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
1.88
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
0.0%
Payout ratio
0.0%
Last ex-div date
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