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Cars.com Inc

Cars.com Inc

CARS
$11.79USD↓-1.67%-0.20 today

MARKET CAP

631.2M

P/E (TTM)

21.7x

FWD P/E

9.1x

DAY RANGE

$12 – $12

52W RANGE

$7
$14

AI Summary

Stalk
StalkMedium

The stock remains in a medium-term Stage 2 uptrend above the rising 200-day SMA, but it is consolidating under converged 9- and 20-day EMAs with neutral momentum. No primary continuation patterns are active; a single-bar Bullish Exhaustion signals waning upside energy. Given attractive free cash flow yield and valuation support, the medium-term bias is bullish, yet short-term timing is unfavorable—entries are best deferred. A pullback toward the 50-day SMA that holds would offer an appropriate engagement zone, while a clean break above the 20-day EMA and the $12.10–$12.20 zone on volume would confirm renewed upside.

  • ↑Q2 revenue $179.9M (+1% YoY) led by dealer rev +3%
  • ↑Adjusted opex down to $144.3M (–6% YoY) yields 29.4% EBITDA margin
  • ↓OEM/national revenues projected down 18% YoY offset dealer gains
Full analysis →

The case for & against

Bull & Bear analysis

Bearish

Cars.com Inc. (NYSE: CARS) acts as a leading online automotive marketplace connecting buyers, sellers, and dealers. The company is strategically positioned within the digital transformation of the automotive sector, leveraging technology and data to enhance user experiences in the automotive sales process. Its focus on operational efficiencies and marketplace-centric strategies aims to adapt to the evolving landscape marked by shifts toward electric vehicles and changing consumer preferences.

Bull says

  • ↑Q2 revenue $179.9M (+1% YoY) led by dealer rev +3%
  • ↑Adjusted opex down to $144.3M (–6% YoY) yields 29.4% EBITDA margin
  • ↑H1 operating cash flow $55.6M funds $90M 2026 share repurchase plan
  • ↑Premium package adoption aiming for 15% by end-2026 with early traction
  • ↑High earnings yield and book-to-price indicate undervaluation and strong leverage

Bear says

  • ↓OEM/national revenues projected down 18% YoY offset dealer gains
  • ↓Pricing-transparency rules may strain dealer relationships
  • ↓Shift to value over traffic volume risks poor execution
  • ↓Subscriber growth hampered by organizational misalignment
  • ↓Negative dividend yield and weak growth factors limit returns
  • ↓High stock volatility raises risk for conservative investors

Investment themes with CARS

Buybacks↑ +0.48%

Companies repurchasing their own shares

C · JCI · WFC

Earnings Call · Q3 2023 · Mgmt. Guidance

Updated 12-02-2024neutral

Transcript signals

Bull points

  • excited to partner and distribute our technology like Accu-Trade throughout the region where we've had steady inbound demand from Canadian dealers, but not a real fulfillment capability to serve the market in real time. And so, we've now rapidly built in distribution throughout the country.
  • we believe D2C is a really attractive way for us to expand our geography and also sort of extend the reach of our solutions.
  • we feel very confident working with our OEM partners that will rapidly expand the number of OEMs that we're eligible for.

Bear points

  • you also have to remember, and we documented a chart in our earnings that shows that dealer count. If you look at where some of that dealer growth or dealer loss came from has been the fall of digital dealers. It largely scaled up over the last few years as companies like Vroom, Carvana, Shift, Tred, CarLotz expanded virtual dealerships and those businesses have a lot bigger challenges that resulted in a pullback of close to 700 dealerships falling out of our dealer count.
  • we did experience dealer losses during COVID. But post-COVID, essentially post kind of Q2 of 2020, we were on a very steady progression upwards in terms of dealer customer additions. And I would attribute it to a couple of different things. I think our investments in the business to improve traffic, the quality of our SEO, the strength of our organic audience, expansion of our product suite on the solutions side, which is another sort of avenue by which dealers can get to know our marketplace.
  • We have seen a little bit of pressure in the last several quarters on the dealer customer number, which as Alex mentioned, is very much attributable to some of the challenges, certain digital dealers we're experiencing over, call it, the last year, which then resulted in them pulling back advertising spend when their business models were going through those challenges.
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