Attractive stocks have exceptional fundamentals. In the case of CarGurus, Inc. (NASDAQ:CARG), there's is a financially-healthy company with a strong track record and a excellent growth outlook. Below is a brief commentary on these key aspects. If you're interested in understanding beyond my broad commentary, read the full report on CarGurus here.
Flawless balance sheet with reasonable growth potential
CARG is an attractive stock for growth-seeking investors, with an expected earnings growth of 22% in the upcoming year. This growth in the bottom-line is bolstered by an impressive top-line expansion of 52% over the same period, which is a sustainable driver of high-quality earnings, as opposed to pure cost-cutting activities. CARG has a strong track record of performance. In the previous year, CARG delivered an impressive double-digit return of 34% Unsurprisingly, CARG surpassed the Interactive Media and Services industry return of 15%, which gives us more confidence of the company's capacity to drive earnings going forward.
CARG's ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This indicates that CARG has sufficient cash flows and proper cash management in place, which is an important determinant of the company’s health. Looking at CARG's capital structure, the company has no debt on its balance sheet. This implies that the company is running its operations purely on off equity funding. which is rather impressive for a US$4.4b market cap company. CARG has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.
For CarGurus, I've put together three relevant aspects you should look at:
- Valuation: What is CARG worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether CARG is currently mispriced by the market.
- Dividend Income vs Capital Gains: Does CARG return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from CARG as an investment.
- Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of CARG? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.