2 Reasons to Like CARG (and 1 Not So Much) Radek Strnad Thu, October 8, 2026 at 12:00 PM EDT 3 min read CARG -0.24% ^GSPC -0.35% Trade CARG on Coinbase Trading disclosure Trading disclosure The above button links to Coinbase. Yahoo Finance is not a broker-dealer or investment adviser and does not offer securities or cryptocurrencies for sale or facilitate trading. Coinbase pays us for certain activity generated through this link. Prices displayed are informational.
Over the past six months, CarGurus's shares (currently trading at $28.54) have posted a disappointing 17.4% loss, well below the S&P 500's 15.2% gain. This may have investors wondering how to approach the situation.
Following the drawdown, is this a buying opportunity for CARG? Find out in our full research report, it's free.
Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ:CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable — for example, revenue could be inflated through excessive spending on advertising and promotions.
CarGurus's EPS grew at 35.5% compounded annual growth rate over the last three years, higher than its 6.5% annualized revenue declines. This tells us management adapted its cost structure in response to a challenging demand environment.
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
CarGurus has shown terrific cash profitability, driven by its lucrative business model that enables it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company's free cash flow margin was among the best in the consumer internet sector, averaging 28.6% over the last two years.
As an online marketplace, CarGurus generates revenue growth by increasing both the number of users on its platform and the average order size in dollars.
Over the last two years, CarGurus's paying dealers, a key performance metric for the company, increased by 5% annually to 34,629 in the latest quarter. This growth rate lags behind the hottest consumer internet applications. If CarGurus wants to accelerate growth, it likely needs to engage users more effectively with its existing offerings or innovate with new products.
CarGurus's positive characteristics outweigh the negatives. After the recent drawdown, the stock trades at 7.4× forward EV/EBITDA (or $28.54 per share). Is now a good time to buy? See for yourself in our comprehensive research report, it's free.
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren't just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week's Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.
