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1. Company Snapshot

1.a. Company Description

Cars.com Inc.operates as a digital marketplace and provides solutions for the automotive industry.Its platform connects car shoppers with sellers.


The company, through its marketplace, dealer websites, and other digital products, showcases dealer inventory, elevate and amplify dealers' and automotive manufacturers' (OEMs) brands, connect sellers with ready-to-buy audience, and empower shoppers with the resources and information needed to make car buying decisions.It also offers marketplace products, such as marketplace subscription advertising and social selling services; digital solutions, including Website platform hosting, AI chat tool, digital retailing, and review and reputation management; and advertising comprising display advertising, instant loan screening and approvals, digital advertising, and in-market audio services.As of December 31, 2021, the company served 19,179 dealer customers in 50 states, which included franchise and independent dealers, with digital and brick-and-mortar stores; and primary automakers selling vehicles in the United States.


Its customers are local car dealers, OEMs, and other national advertisers.Cars.com Inc.was founded in 1998 and is based in Chicago, Illinois.

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1.b. Last Insights on CARS

Cars.com Inc.'s recent performance was negatively impacted by declining consumer traffic, stagnant dealer growth, and eroding consumer relevance. The company's Q4 earnings were disappointing, with low single-digit revenue growth and guidance for only 0%-2% y/y revenue growth in FY26. Operating and adjusted EBITDA margins are under pressure, and a $0.4 billion net debt load constrains financial flexibility. Additionally, the company's Q4 earnings missed estimates, with quarterly earnings of $0.44 per share, below the Zacks Consensus Estimate of $0.56 per share. A $86 million share buyback was completed, retiring 9% of shares outstanding.

1.c. Company Highlights

2. Cars.com Delivers Record Q3 Revenue Amidst Strong Dealer Count Growth

Cars.com Inc. reported record revenue of $181.6 million for the third quarter of 2025, up 1% year-over-year, driven by a 2% rise in dealer revenue. The company's adjusted EBITDA was $55 million, up 7% year-over-year, with an adjusted EBITDA margin of 30.1%. Earnings per diluted share were $0.12 on a GAAP basis, while adjusted net income was $30.4 million or $0.48 per diluted share, slightly below analyst estimates of $0.5. The company's strong financial performance was accompanied by a new 3-year high in dealer count, powering 19,526 dealers in Q3, and a significant increase in average monthly visitors to 25.4 million, up 4% year-over-year.

Publication Date: Dec -22

📋 Highlights
  • Record Revenue: reached $181.6M in Q3 2025, up 1% YoY, with dealer revenue rising 2% YoY.
  • Adjusted EBITDA Growth: hit $55M, +7% YoY, and a margin of 30.1%, reflecting cost discipline and pricing initiatives.
  • Dealer Expansion: powered 19,526 dealers, a 3-year high, with 270+ added YoY and 70% using non-base-tier products.
  • AI-Driven Engagement: saw users saving 3x more vehicles and viewing 2x more listings via Carson, boosting consumer retention.
  • Strong Free Cash Flow: generated $94.5M YTD, with $64M in share repurchases, targeting $70-90M annually for capital returns.

Operational Highlights

The company saw growth across its marketplace and solutions performance, with sales velocity and unit volume lifting, and added 270-plus dealers year-over-year. The AccuTrade platform has seen steady dealer adoption, with a large enterprise deal closed last quarter. The company's focus on franchise dealerships and late model or new car shoppers has helped mitigate market pressures, and its AI-powered solutions, such as Carson, are driving increased consumer engagement, with users saving 3x more vehicles and looking at 2x more listings than other users.

Growth Drivers and Outlook

The company is well-positioned for growth, with a healthy pipeline for demonstrations and a focus on standardizing the AccuTrade platform across larger dealer groups. Cars.com reaffirmed its expectation for low single-digit revenue growth year-over-year in the second half of 2025, driven by improved dealer count, product adoption, and repackaging for marketplace and websites. Analysts estimate next year's revenue growth at 3.2%. The adjusted EBITDA margin outlook for fiscal 2025 remains between 29% to 31%, reflecting disciplined cost management.

Valuation and Capital Allocation

With a P/E Ratio of 26.57 and an EV/EBITDA of 4.62, the market appears to be pricing in a reasonable level of growth. The company's commitment to share repurchases is evident, with $64 million worth of shares repurchased in the first nine months of 2025, and a target to repurchase $70-90 million for the full year. The company's strong free cash flow yield of 17.5% and net debt to EBITDA ratio of -0.36 indicate a healthy financial position, allowing for flexibility in capital allocation.

3. NewsRoom

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Analyzing Fiverr International (NYSE:FVRR) and Cars.com (NYSE:CARS)

Mar -03

Source: defenseworld.net

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Cars.com: A Struggling Business As Consumer Traffic Declines

Feb -27

Source: seekingalpha.com

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Here Are Friday’s Top Wall Street Analyst Research Calls: Block, Costco, Dollar Tree, Duolingo, Palantir Technologies, Southwest Airlines, Synopsis, Warner Bros. Discovery, and More

Feb -27

Source: 247wallst.com

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Cars.com Inc. (CARS) Q4 2025 Earnings Call Transcript

Feb -27

Source: seekingalpha.com

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Cars.com (CARS) Reports Q4 Earnings: What Key Metrics Have to Say

Feb -26

Source: zacks.com

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Cars.com (CARS) Misses Q4 Earnings Estimates

Feb -26

Source: zacks.com

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Cars.com Reports Fourth Quarter and Full Year 2025 Results

Feb -26

Source: prnewswire.com

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Cars.com (NYSE:CARS) and MercadoLibre (NASDAQ:MELI) Critical Contrast

Feb -22

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.59%)

6. Segments

Dealer

Expected Growth: 3.5%

The 3.5% growth of Dealers from Cars.com Inc. is driven by increasing online car shopping, rising demand for digital marketing solutions, and growing adoption of dealer management systems. Additionally, the company's expanding product offerings, strategic partnerships, and improving operational efficiency also contribute to this growth.

OEM and National

Expected Growth: 4.5%

OEM segment growth driven by increasing online marketing spend and partnerships with automakers. National segment growth fueled by rising demand for digital advertising and expanding dealer network, resulting in a 4.5% growth rate.

Other

Expected Growth: 3.8%

Cars.com Inc.'s 3.8% growth is driven by increasing online car shopping, rising demand for digital marketing solutions, and strategic partnerships with dealerships and OEMs. Additionally, the company's focus on improving user experience, expanding its inventory and pricing data, and enhancing its AI-powered car matching technology contribute to its growth momentum.

7. Detailed Products

New Car Listings

Comprehensive listings of new cars for sale, including detailed information on features, pricing, and dealer information.

Used Car Listings

Extensive listings of used cars for sale, including certified pre-owned vehicles, with detailed information on features, pricing, and dealer information.

Dealer Reviews

Reviews and ratings of car dealerships, providing insights into their customer service, pricing, and overall experience.

Car Research Tools

Comprehensive research tools, including car reviews, comparisons, and pricing information, to help car buyers make informed decisions.

Inventory Management

Tools and services for car dealerships to manage their inventory, including listing and pricing management.

Digital Marketing Solutions

Digital marketing solutions, including targeted advertising and lead generation, to help car dealerships reach potential customers.

8. Cars.com Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Cars.com Inc. is medium because while there are alternative platforms for buying and selling cars, Cars.com's strong brand recognition and large inventory of listings make it a preferred choice for many consumers.

Bargaining Power Of Customers

The bargaining power of customers is low because Cars.com Inc. offers a wide range of listings and tools to help customers make informed purchasing decisions, reducing their bargaining power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium because while Cars.com Inc. relies on dealerships and private sellers to list their vehicles, the company's large user base and strong brand recognition give it some bargaining power.

Threat Of New Entrants

The threat of new entrants is high because the online car buying and selling market is highly competitive, and new entrants could potentially disrupt the market with innovative business models or technologies.

Intensity Of Rivalry

The intensity of rivalry is high because the online car buying and selling market is highly competitive, with many established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 49.55%
Debt Cost 3.95%
Equity Weight 50.45%
Equity Cost 14.22%
WACC 9.13%
Leverage 98.20%

11. Quality Control: Cars.com 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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Cars

A-Score: 4.1/10

Value: 6.5

Growth: 5.3

Quality: 6.3

Yield: 0.0

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A-Score: 3.7/10

Value: 10.0

Growth: 3.6

Quality: 5.3

Yield: 0.0

Momentum: 0.5

Volatility: 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

8.24$

Current Price

8.24$

Potential

-0.00%

Expected Cash-Flows