One-glance verdict
Undervalued
$34.28 our estimate vs market $11.24
Wall Street consensus: $13.33 (-61.1% lower than our fair-value estimate)
67% below our estimate, below the bear case
Fundamentals snapshot
Cars.com Inc.
CARS · NYQ · Communication Services · Internet Content & Information
Current price
$11.24
52-week range
$7.40 - $13.69
Market cap
$601.71M
Balance sheet
Stretched
1.98x Concerning
Net debt $413.84M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
0 Risks
3 rewards · 0 risks
- Reward Revenue grew 0.3% last year.
- Reward Returns 7.4% on equity, ahead of 40% of its peers.
- Reward Free cash flow was positive in 10/10 years.
What this company does
Cars.com Inc.
Cars.com Inc. is a technology company that helps people buy and sell cars, mostly through its website Cars.com. They make money by selling advertising and digital tools to car dealerships and car manufacturers, helping them show off their cars and manage customer reviews. This business model means their income relies on how much advertising and services car companies are willing to buy.
How the company got here
Cars.com Inc. was founded in 1998, initially as a joint venture between several newspaper companies. It began as a website to help people find cars for sale, evolving over time into a more comprehensive platform for the automotive industry. A significant turning point was its transition to a standalone public company in 2017, allowing it to pursue its own strategic direction. The company has since expanded its offerings through acquisitions, integrating businesses that provide dealer websites, digital marketing, reputation management, and vehicle appraisal tools. This strategic growth has transformed Cars.com from a simple listings site into a broader automotive commerce platform.
What it actually does
Cars.com Inc. operates as a technology company focused on the automotive industry, aiming to simplify the process of buying and selling cars. Its core offering is a marketplace that connects car shoppers with dealerships, providing tools for research, price comparison, and inventory browsing. Beyond the consumer-facing marketplace, Cars.com also provides a suite of digital solutions for car dealers and manufacturers (OEMs). These solutions help businesses manage their online presence, advertise their inventory, handle customer reviews, and assess trade-in vehicle values.
Marketplace
The Marketplace segment is the heart of Cars.com's business, acting as a digital hub where consumers can search for new and used cars. It allows car shoppers to find vehicles, compare prices, read reviews, and access information to help them make purchasing decisions. For dealerships and original equipment manufacturers (OEMs), this segment offers a way to showcase their vehicle inventory to a large audience of potential buyers. This part of the business is crucial for generating leads and driving sales for automotive retailers.
Dealer Solutions
This segment encompasses a range of technology and marketing services designed to help car dealerships operate more effectively and sell more cars. It includes services like building and managing dealer websites, providing digital advertising tools to reach car buyers, and offering reputation management solutions that help dealerships manage online reviews and customer feedback. Essentially, these solutions aim to enhance a dealer's online presence and marketing efforts, making it easier for them to attract and convert customers.
Trade-in and Appraisal Tools
Cars.com offers tools that help determine the value of a vehicle a customer might be trading in. Products like AccuTrade use data and diagnostic scans to provide quick and accurate trade-in offers. This service is valuable for both consumers, who want a fair price for their old car, and dealerships, who need to efficiently source used inventory. By streamlining the appraisal process, this segment helps to facilitate smoother transactions in the car buying and selling journey.
What management is betting on now
Cars.com's current strategy focuses on evolving into a comprehensive automotive commerce platform. Management is investing in accelerating product development and innovation, particularly by integrating Artificial Intelligence (AI) into its offerings to provide more personalized insights and efficient tools for both consumers and dealers. They are also streamlining operations and costs to improve efficiency and profitability. The goal is to create greater interconnectivity across their various solutions, making the Cars.com ecosystem more valuable and sticky for its customers, ultimately driving sustainable revenue growth and shareholder value.
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
$52.85M
FY2024 Q4
$29.05M
FY2025 Q1
$28.64M
FY2025 Q2
$23.70M
FY2025 Q3
$58.28M
FY2025 Q4
$36.73M
FY2026 Q1
$39.55M
FY2026 Q2
$15.27M
Revenue
$179.93M
Net income
$14.26M
Diluted EPS
0.25
Operating cash flow
$15.81M
Free cash flow
$15.27M
Fetching…
Sources
Revenue
$180.22M
Net income
$4.98M
Diluted EPS
0.08
Operating cash flow
$39.81M
Free cash flow
$39.55M
Fetching…
Sources
Revenue
$183.90M
Net income
$7.40M
Diluted EPS
0.12
Operating cash flow
$37.12M
Free cash flow
$36.73M
Fetching…
Sources
Revenue
$181.57M
Net income
$7.66M
Diluted EPS
0.12
Operating cash flow
$58.84M
Free cash flow
$58.28M
Fetching…
Sources
Revenue
$178.74M
Net income
$7.01M
Diluted EPS
0.11
Operating cash flow
$26.23M
Free cash flow
$23.70M
Fetching…
Sources
Revenue
$179.02M
Net income
$-2.01M
Diluted EPS
-0.03
Operating cash flow
$29.45M
Free cash flow
$28.64M
Fetching…
Sources
Revenue
$180.43M
Net income
$17.30M
Diluted EPS
0.26
Operating cash flow
$30.01M
Free cash flow
$29.05M
Fetching…
Sources
Revenue
$179.65M
Net income
$18.72M
Diluted EPS
0.28
Operating cash flow
$53.80M
Free cash flow
$52.85M
Fetching…
Sources
Is it cheap or expensive?
Fair value $34.28 vs current price $11.24
Wall Street consensus is the average analyst price target: $13.33 (-61.1% lower than our fair-value estimate).
Our most-likely fair value is $34.28 a share — about 205.0% above today's price of $11.24, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $413.8M. Interest coverage 2.0x.
Net debt
$413.84M
Interest coverage
1.98x
Cars.com Inc.'s profit covers its interest bill about 2.0 times over.
Stretched
Worse cushion
Baseline
Better cushion
CARS
BASELINE
Cars.com Inc.
Total debt $447.12M Interest coverage 1.98x This is the baseline the peer rows are being compared against.
Total debt $185.14M Interest coverage 26.77x +1,250% vs CARS Carries about 13.5x more debt cushion than CARS.
Total debt $422.35M Interest coverage 3.82x +93% vs CARS Carries about 1.9x more debt cushion than CARS.
Total debt $123.30M Interest coverage 13.37x +574% vs CARS Carries about 6.7x more debt cushion than CARS.
Total debt $246.05M Interest coverage 1.63x -18% vs CARS Carries about 1.2x less debt cushion than CARS.
What you should know
The case for and against CARS
3 Rewards
0 Risks
Rewards
-
Revenue grew 0.3% last year.
-
Returns 7.4% on equity, ahead of 40% of its peers.
-
Free cash flow was positive in 10/10 years.
Risks
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)
19.38x
Forward P/E
4.81x
P/B
1.37x
P/S
0.83x
EV/EBITDA
6.46x
PEG ratio
2.35x
Profitability
How much profit each dollar creates
Gross margin
67.1%
Operating margin
15.5%
Net margin
4.7%
ROE
7.4%
ROA
5.0%
Health
Liquidity and balance-sheet strength
Debt / equity
1.01x
Current ratio
2.00x
Quick ratio
1.81x
Total debt
$447.12M
Total cash
$33.29M
Growth
How the business has been compounding
Revenue TTM
$725.63M
Revenue 5Y CAGR
3.8%
EPS TTM
0.58
EPS 5Y CAGR
8.6%
Cash flow
How much cash the business throws off
Operating CF TTM
$151.58M
Free CF TTM
$147.35M
FCF margin
20.3%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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