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Bear of the Day: Cars.com (CARS)

Kevin Cook
·2-min read

Cars.com CARS may be a casualty of inflation as auto prices surge above MSRP by 10% in many areas of the country.

The small-cap operator of an online automotive platform offers new and used vehicle listings, expert and consumer reviews, and research tools to millions of consumers each month.

The company also engages in the sale of display advertising to national advertisers.

Cars.com Inc. is based in Chicago.

CARS delivered quarterly earnings of $0.08 per share, beating the Zacks Consensus Estimate of $0.05 per share. This compares to earnings of $0.08 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 60%. A quarter ago, it was expected that this online automotive marketplace would post earnings of $0.03 per share when it actually produced earnings of $0.06, delivering a surprise of 100%.

Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Cars.com, which belongs to the Zacks Internet - Commerce industry, posted revenues of $162.87 million for the quarter ended June 2022, surpassing the Zacks Consensus Estimate by 0.61%. This compares to year-ago revenues of $155.53 million. The company has topped consensus revenue estimates four times over the last four quarters.

The reason that CARS is in the cellar of the Zacks Rank is that analysts continue to lower EPS estimates.

This may be a function of consumers retracting from high prices for autos and doing more competitive shopping.

With over $650 million in sales projected this year, CARS seems like a diamond in the junk yard.

But let's wait before grabbing the keys until the estimates stop going down and start going back up.

The Zacks Rank will let you know.


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