📊 CARG Key Takeaways
Is CarGurus, Inc. (CARG) a Good Investment?
CarGurus demonstrates exceptional financial health with a fortress balance sheet (zero debt, $72M cash), exceptional gross margins of 92.2%, and strong free cash flow generation of $69.5M (28.5% FCF margin). Despite flat net income growth year-over-year, the company maintains solid operating margins of 16.5% and healthy revenue growth of 13.7%, indicating a fundamentally sound business model with significant financial flexibility.
CarGurus shows strong fundamental quality with double-digit revenue growth, exceptional gross margins, and robust free cash flow generation. The balance sheet is very clean with substantial cash, no long-term debt, and strong liquidity, which supports resilience and optionality. The main caution is that net income was flat despite revenue growth, suggesting investors should watch whether operating leverage continues translating into sustained bottom-line expansion.
Why Buy CarGurus, Inc. Stock? CARG Key Strengths
- Zero long-term debt with $72M cash provides significant financial flexibility and eliminates financial distress risk
- Exceptional 92.2% gross margin demonstrates strong pricing power and efficient platform economics
- Strong free cash flow generation of $69.5M with 28.5% FCF margin shows exceptional operational efficiency
- Healthy 1.65x current ratio with quick ratio matching current ratio, indicating high-quality liquid assets
- Solid revenue growth of 13.7% YoY paired with 13.2% net profit margin demonstrates profitable scaling
- High profitability with 92.8% gross margin, 27.0% operating margin, and 17.2% net margin
- Excellent financial health with $190.52M in cash, no long-term debt, and 2.81x current ratio
- Strong cash generation with $288.90M free cash flow and a 31.9% FCF margin
CARG Stock Risks: CarGurus, Inc. Investment Risks
- Net income flat YoY (0.0% growth) despite 13.7% revenue growth signals potential margin compression from rising costs
- Operating margin of 16.5% leaves limited room for deterioration if operating expenses accelerate
- Digital automotive marketplace business subject to cyclical economic conditions and intense competitive pressures
- 23 insider Form 4 filings in last 90 days warrant investigation into transaction patterns and intent
- Revenue growth rate of 13.7% is moderate; monitor for deceleration indicating marketplace maturity or competitive losses
- Net income was flat year over year despite 13.7% revenue growth, which may indicate margin or cost pressure below operating income
- Very high ROE may be partly influenced by a relatively smaller equity base rather than pure earnings acceleration
- EPS growth far exceeded net income growth, suggesting per-share improvement may rely partly on share count dynamics rather than purely operating performance
Key Metrics to Watch
- Gross margin trend - critical indicator of pricing power and competitive positioning
- Operating margin expansion - whether company achieves operating leverage at scale
- Free cash flow growth - sustainability of cash generation relative to revenue growth
- Revenue growth rate trajectory - early warning for marketplace saturation or share loss
- Operating cash flow to net income ratio - quality of earnings and accrual-based distortions
- Net income growth relative to revenue growth
- Free cash flow margin sustainability
CarGurus, Inc. (CARG) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The 28.5% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments.
CARG Profit Margin, ROE & Profitability Analysis
CARG vs Technology Sector: How CarGurus, Inc. Compares
How CarGurus, Inc. compares to Technology sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is CarGurus, Inc. Stock Overvalued? CARG Valuation Analysis 2026
Based on fundamental analysis, CarGurus, Inc. has mixed fundamental signals relative to the Technology sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
CarGurus, Inc. Balance Sheet: CARG Debt, Cash & Liquidity
CARG Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: CarGurus, Inc.'s revenue has remained relatively flat over the 5-year period, with a 5% decline. The most recent EPS of $0.19 reflects profitable operations.
CARG Revenue Growth, EPS Growth & YoY Performance
CARG Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $212.2M | $32.2M | $0.34 |
| Q3 2025 | $231.4M | $21.3M | $0.21 |
| Q2 2025 | $218.7M | $21.3M | $0.22 |
| Q1 2025 | $215.8M | $21.3M | $0.20 |
| Q3 2024 | $219.4M | $16.1M | $0.17 |
| Q2 2024 | $218.7M | $16.1M | $0.12 |
| Q1 2024 | $215.8M | $16.1M | $0.10 |
| Q3 2023 | $219.4M | $16.1M | $0.14 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
CarGurus, Inc. Dividends, Buybacks & Capital Allocation
CARG SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for CarGurus, Inc. (CIK: 0001494259)
📋 Recent SEC Filings
❓ Frequently Asked Questions about CARG
What is the AI rating for CARG?
CarGurus, Inc. (CARG) has a Combined AI Rating of BUY from Claude (BUY) and ChatGPT (BUY) with 81% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are CARG's key strengths?
Claude: Zero long-term debt with $72M cash provides significant financial flexibility and eliminates financial distress risk. Exceptional 92.2% gross margin demonstrates strong pricing power and efficient platform economics. ChatGPT: High profitability with 92.8% gross margin, 27.0% operating margin, and 17.2% net margin. Excellent financial health with $190.52M in cash, no long-term debt, and 2.81x current ratio.
What are the risks of investing in CARG?
Claude: Net income flat YoY (0.0% growth) despite 13.7% revenue growth signals potential margin compression from rising costs. Operating margin of 16.5% leaves limited room for deterioration if operating expenses accelerate. ChatGPT: Net income was flat year over year despite 13.7% revenue growth, which may indicate margin or cost pressure below operating income. Very high ROE may be partly influenced by a relatively smaller equity base rather than pure earnings acceleration.
What is CARG's revenue and growth?
CarGurus, Inc. reported revenue of $243.6M.
Does CARG pay dividends?
CarGurus, Inc. does not currently pay dividends.
Where can I find CARG SEC filings?
Official SEC filings for CarGurus, Inc. (CIK: 0001494259) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is CARG's EPS?
CarGurus, Inc. has a diluted EPS of $0.34.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is CARG a good stock to buy right now?
Based on our AI fundamental analysis in May 2026, CarGurus, Inc. has a BUY rating with 81% confidence. The AI analysis suggests favorable fundamentals based on SEC filings. This is not investment advice.
Is CARG stock overvalued or undervalued?
Valuation metrics for CARG: ROE of 13.6% (sector avg: 22%), net margin of 13.2% (sector avg: 18%). Compare these metrics with sector averages to assess valuation.
Should I buy CARG stock in 2026?
Our dual AI analysis gives CarGurus, Inc. a combined BUY rating for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is CARG's free cash flow?
CarGurus, Inc.'s operating cash flow is $69.8M, with capital expenditures of $391.0K. FCF margin is 28.5%.
How does CARG compare to other Technology stocks?
Vs Technology sector averages: Net margin 13.2% (avg: 18%), ROE 13.6% (avg: 22%), current ratio 1.65 (avg: 2.5).