📊 CARG Key Takeaways
Is CarGurus, Inc. (CARG) a Good Investment?
CarGurus demonstrates exceptional financial health with industry-leading profitability metrics (92.8% gross margin, 27% operating margin, 17.2% net margin) and strong growth (13.7% revenue YoY) while maintaining a fortress balance sheet with zero debt and $190.5M cash. The company generates substantial free cash flow ($288.9M, 31.9% FCF margin) with minimal capital requirements, positioning it for sustainable shareholder returns and strategic 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
- Exceptional profitability with 92.8% gross margin and 27% operating margin indicating strong pricing power and operational efficiency
- Fortress balance sheet: zero long-term debt, $190.5M cash, 2.81x current ratio, and 8429x interest coverage ratio
- Robust free cash flow generation of $288.9M (31.9% FCF margin) with minimal capex requirements ($6.4M) enabling reinvestment or returns
- Strong return on equity of 41.7% and ROA of 23.6% demonstrating efficient capital deployment
- Revenue growth of 13.7% YoY coupled with EPS growth of 675% indicates improving operational leverage and earnings quality
- 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
- Revenue growth of 13.7% is moderate for a technology services company, suggesting potential market saturation or competitive pressures
- High insider trading activity (23 Form 4 filings in 90 days) warrants monitoring for potential insider concerns or executive compensation-driven selling
- Net income growth at 0% YoY despite 13.7% revenue growth indicates margin compression or one-time items requiring investigation
- Concentrated business model in automotive classified services sector creates exposure to economic cycles and industry disruption
- 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
- Revenue growth trajectory and year-over-year acceleration/deceleration
- Operating margin sustainability and gross margin trends
- Free cash flow conversion and capital expenditure efficiency
- Debt-to-equity ratio and management's capital allocation priorities
- Return on equity trends and shareholder equity growth
- Net income growth relative to revenue growth
- Free cash flow margin sustainability
CarGurus, Inc. (CARG) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The 31.9% free cash flow margin provides substantial flexibility for dividends, buybacks, and strategic investments. Strong liquidity with a 2.81x current ratio provides a solid financial cushion.
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. appears fundamentally strong 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 |
|---|---|---|---|
| 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 |
| Q2 2023 | $239.7M | $16.1M | $-0.09 |
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 (STRONG BUY) and ChatGPT (BUY) with 88% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are CARG's key strengths?
Claude: Exceptional profitability with 92.8% gross margin and 27% operating margin indicating strong pricing power and operational efficiency. Fortress balance sheet: zero long-term debt, $190.5M cash, 2.81x current ratio, and 8429x interest coverage ratio. 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: Revenue growth of 13.7% is moderate for a technology services company, suggesting potential market saturation or competitive pressures. High insider trading activity (23 Form 4 filings in 90 days) warrants monitoring for potential insider concerns or executive compensation-driven selling. 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 $907.0M.
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 $1.55.
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 April 2026, CarGurus, Inc. has a BUY rating with 88% 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 41.7% (sector avg: 22%), net margin of 17.2% (sector avg: 18%). Higher ROE suggests strong returns relative to peers.
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 $295.3M, with capital expenditures of $6.4M. FCF margin is 31.9%.
How does CARG compare to other Technology stocks?
Vs Technology sector averages: Net margin 17.2% (avg: 18%), ROE 41.7% (avg: 22%), current ratio 2.81 (avg: 2.5).
Why is CARG's return on equity (ROE) so high?
CarGurus, Inc. has a return on equity of 41.7%, significantly above the Technology sector average of 22%. A high ROE indicates the company is efficient at generating profits from shareholder equity. This is supported by a 17.2% net margin.