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1. Company Snapshot

1.a. Company Description

CarGurus, Inc.operates an online automotive marketplace connecting buyers and sellers of new and used cars in the United States and internationally.The company provides consumers an online automotive marketplace where they can search for new and used car listings from its dealers, as well as sell their car in the United States marketplace.


Its marketplace connects dealers to a large audience of informed and engaged consumers.The company operates online marketplaces under the CarGurus brand in Canada and the United Kingdom; and the Autolist and PistonHeads online marketplaces as independent brands in the United States and the United Kingdom.CarGurus, Inc.


was founded in 2005 and is headquartered in Cambridge, Massachusetts.

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1.b. Last Insights on CARG

CarGurus' recent performance was negatively impacted by CEO Jason Trevisan's sale of 8,452 shares, followed by another sale of 16,548 shares, which may have raised concerns about insider confidence. Additionally, the company's consensus rating of "Hold" from 13 analysts, with 8 holding and 5 buying recommendations, may have contributed to the negative sentiment. However, CarGurus reported strong Q4 2025 earnings, beating estimates with $0.63 per share, and announced a 14% revenue growth to $907M, with a $350 million share repurchase program in 2025 and a new $250 million program authorized for 2026.

1.c. Company Highlights

2. CarGurus' Strong 2025 Results and Promising Outlook

CarGurus reported a robust 2025 with revenue growing 14% to $907 million, and adjusted EBITDA increasing 25% to $319 million. The company's earnings per share (EPS) came in at $0.63, beating estimates of $0.61. The strong growth was driven by a significant increase in its dealer base, with the global paying dealer count rising by 2,399. The U.S. QARSD grew 8% year-over-year, while international revenue surged 27% year-over-year, driven by accelerated dealer acquisition and wallet share expansion.

Publication Date: Feb -22

📋 Highlights
  • Revenue & Profit Growth:: 2025 revenue rose 14% to $907M; adjusted EBITDA surged 25% to $319M.
  • Dealer Base Expansion:: Global paying dealers increased by 2,399; U.S. QARSD grew 8% YoY, driving revenue.
  • International Momentum:: International revenue jumped 27% YoY, fueled by dealer acquisition and wallet share growth.
  • New Product Success:: Launches like PriceVantage and CG Discover are projected to hit 8-figure revenue in 2026, scaling 15x YoY.
  • Capital Allocation & Guidance:: $250M share buyback program; 2026 revenue growth target of 10–13% amid EBITDA margin compression of 1.5–2.5 pts.

Growth Drivers and New Products

The company's growth was fueled by the launch of new products, including PriceVantage, CG Discover, and Dealership Mode, which have shown promising signs of engagement and scaling. These products are expected to drive growth, with the monetized dealer products launched in 2025 expected to grow approximately 15x in 2026 and achieve 8-figure revenue levels. The company's focus on ROI for customers, lead growth, and new software and data tools has driven retention to a 3-year high.

Outlook and Guidance

For 2026, CarGurus expects revenue growth of 10% to 13% year-over-year and non-GAAP adjusted EBITDA margins to compress approximately 1.5 to 2.5 percentage points. The company's guidance implies continued strong growth, driven by the expansion of its dealer base and the success of its new products. With a current P/E Ratio of 18.44 and an EV/EBITDA of 10.15, the market appears to have priced in a significant level of growth. The company's ROIC of 24.64% and ROE of 39.29% indicate a strong ability to generate returns on invested capital.

Valuation and Capital Allocation

The company's strong financial performance and promising outlook are supported by its solid capital allocation strategy. The newly authorized $250 million share repurchase program highlights the company's commitment to returning value to shareholders. With a P/S Ratio of 3.3 and a Free Cash Flow Yield of 9.06%, the company's valuation appears reasonable, considering its growth prospects and financial performance.

3. NewsRoom

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CarGurus, Inc. (NASDAQ:CARG) Sees Large Growth in Short Interest

Mar -03

Source: defenseworld.net

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Hacking Group Claims Theft of 12.4 Million CarGurus Records

Feb -25

Source: pymnts.com

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CarGurus data breach affects 12.5 million accounts

Feb -24

Source: techcrunch.com

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CarGurus: An Interesting Setup

Feb -23

Source: seekingalpha.com

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Aurora Investment Counsel Purchases New Stake in CarGurus, Inc. $CARG

Feb -22

Source: defenseworld.net

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CarGurus: Great Value As International Growth Takes Off

Feb -20

Source: seekingalpha.com

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CarGurus, Inc. (CARG) Q4 2025 Earnings Call Transcript

Feb -20

Source: seekingalpha.com

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CarGurus (CARG) Q4 Earnings: How Key Metrics Compare to Wall Street Estimates

Feb -20

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.42%)

6. Segments

United States Marketplace

Expected Growth: 6%

Strong demand for used cars, increasing online car shopping, and CarGurus' market-leading inventory and pricing data drive growth in the United States marketplace. Additionally, the company's expanding dealer network, improved user experience, and investments in digital marketing contribute to the 6% growth rate.

Digital Wholesale

Expected Growth: 8%

CarGurus' Digital Wholesale segment growth is driven by increasing adoption of online car buying, expansion into new markets, and strategic partnerships. Additionally, the company's proprietary Instant Market Value (IMV) pricing algorithm and robust inventory management system enable dealers to efficiently source and sell vehicles, further fueling growth.

Other

Expected Growth: 5%

CarGurus' 5% growth is driven by increasing online car shopping, rising demand for used cars, and expanding dealer network. Additionally, the company's investments in artificial intelligence, machine learning, and data analytics enhance its platform, attracting more consumers and dealers. Further, CarGurus' expansion into new markets and services, such as financing and insurance, contribute to its growth.

7. Detailed Products

Listings

CarGurus provides a platform for dealerships and private sellers to list their vehicles for sale, allowing buyers to browse and compare prices.

Dealer Dashboard

A platform for dealerships to manage their inventory, respond to leads, and track performance metrics.

Market Value Analysis

A tool that provides instant market value analysis for vehicles, helping buyers and sellers determine fair prices.

Dealer Reviews

A platform for buyers to review and rate their experiences with dealerships, promoting transparency and accountability.

Advertising

Targeted advertising solutions for dealerships and OEMs to reach in-market car shoppers.

Inventory Management

A tool that helps dealerships manage their inventory, including pricing, merchandising, and distribution.

8. CarGurus, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

CarGurus has a low threat of substitutes due to its unique features and user-friendly interface, making it difficult for customers to find alternative options.

Bargaining Power Of Customers

CarGurus has a medium bargaining power of customers due to the presence of multiple dealerships and private sellers, giving customers some negotiating power.

Bargaining Power Of Suppliers

CarGurus has a low bargaining power of suppliers due to its strong market position and ability to negotiate with dealerships and private sellers.

Threat Of New Entrants

CarGurus has a high threat of new entrants due to the low barriers to entry in the online marketplace, making it easy for new competitors to emerge.

Intensity Of Rivalry

CarGurus operates in a highly competitive market with many established players, leading to a high intensity of rivalry among competitors.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 23.96%
Debt Cost 3.95%
Equity Weight 76.04%
Equity Cost 11.79%
WACC 9.91%
Leverage 31.51%

11. Quality Control: CarGurus, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 7.8

Quality: 8.4

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Momentum: 2.0

Volatility: 6.3

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CarGurus

A-Score: 4.7/10

Value: 2.6

Growth: 6.7

Quality: 8.4

Yield: 0.0

Momentum: 5.0

Volatility: 5.7

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Value: 1.6

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Quality: 5.4

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A-Score: 4.0/10

Value: 6.9

Growth: 2.7

Quality: 4.6

Yield: 0.0

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A-Score: 3.8/10

Value: 4.9

Growth: 3.8

Quality: 2.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

33.53$

Current Price

33.53$

Potential

-0.00%

Expected Cash-Flows