CarGurus, Inc.
CarGurus, Inc. Fundamental Analysis
CarGurus, Inc. (CARG) shows moderate financial fundamentals with a PE ratio of 18.77, profit margin of 16.60%, and ROE of 39.29%. The company generates $1.0B in annual revenue with weak year-over-year growth of -2.17%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 59.5/100 based on profitability, valuation, growth, and balance sheet metrics. The C grade reflects average fundamentals, with notable risks in certain areas.
Fundamental Health Score
We analyze CARG's fundamental strength across five key dimensions:
Efficiency Score
ExcellentCARG demonstrates superior asset utilization.
Valuation Score
ModerateCARG shows balanced valuation metrics.
Growth Score
WeakCARG faces weak or negative growth trends.
Financial Health Score
ExcellentCARG maintains a strong and stable balance sheet.
Profitability Score
ExcellentCARG achieves industry-leading margins.
Key Financial Metrics
Is CARG Expensive or Cheap?
P/E Ratio
CARG trades at 18.77 times earnings. This indicates a fair valuation.
PEG Ratio
When adjusting for growth, CARG's PEG of 3.54 indicates potential overvaluation.
Price to Book
The market values CarGurus, Inc. at 7.82 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 11.70 times EBITDA. This signals the market has high growth expectations.
How Well Does CARG Make Money?
Net Profit Margin
For every $100 in sales, CarGurus, Inc. keeps $16.60 as profit after all expenses.
Operating Margin
Core operations generate 20.70 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $39.29 in profit for every $100 of shareholder equity.
ROA
CarGurus, Inc. generates $23.55 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
CarGurus, Inc. generates strong operating cash flow of $306.29M, reflecting robust business health.
Free Cash Flow
CarGurus, Inc. generates strong free cash flow of $281.57M, providing ample flexibility for dividends, buybacks, or growth.
FCF Per Share
Each share generates $2.85 in free cash annually.
FCF Yield
CARG converts 8.92% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
18.77
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
3.54
vs 25 benchmark
P/B Ratio
Price to book value ratio
7.82
vs 25 benchmark
P/S Ratio
Price to sales ratio
3.23
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.51
vs 25 benchmark
Current Ratio
Current assets to current liabilities
2.81
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.39
vs 25 benchmark
ROA
Return on assets percentage
0.24
vs 25 benchmark
ROCE
Return on capital employed
0.35
vs 25 benchmark
How CARG Stacks Against Its Sector Peers
| Metric | CARG Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 18.77 | 23.49 | Better (Cheaper) |
| ROE | 39.29% | 1160.00% | Weak |
| Net Margin | 16.60% | 672.00% | Weak |
| Debt/Equity | 0.51 | 0.73 | Strong (Low Leverage) |
| Current Ratio | 2.81 | 2.56 | Strong Liquidity |
| ROA | 23.55% | -8277.00% (disorted) | Strong |
CARG outperforms its industry in 4 out of 6 key metrics, particularly excelling in ROA, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews CarGurus, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
61.92%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
-46.95%
Industry Style: Cyclical, Growth, Discretionary
DecliningFCF CAGR
288.49%
Industry Style: Cyclical, Growth, Discretionary
High Growth