Cars.com's Improvement In Financial Results & Long-Term Outlook Not Being Reflected In Stock Valuation, Says Analyst

Cars.com's Improvement In Financial Results & Long-Term Outlook Not Being Reflected In Stock Valuation, Says Analyst
  • Barrington Research analyst Gary Prestopino reiterated an Outperform rating on the shares of Cars.com Inc CARS with a price target of $25.
  • The analyst said Cars.com delivered another quarter of solid results in Q3 FY22 that was in line with guidance driven by growth in traffic, dealer customers, and increased adoption of Dealer Inspire and Accu-Trade solutions.
  • In Q3, daily average listings on the company’s marketplace increased 11% Y/Y for new cars and 9% for used cars.
  • With over 27 million monthly unique visitors, the company has an audience that matches buyers and sellers at scale, the analyst noted.
  • With the acquisition of CreditIQ, Cars.com has expanded into the multi-billion dollar auto finance market giving customers a tool on the platform for car shoppers to ascertain affordability and have the ability to complete more of the transaction online.
  • The analyst said Cars.com increased its Q3 Digital Solutions penetration within its dealer base with the addition of 556 dealers Y/Y and 68 dealers on a sequential basis.
  • With approximately 25 million vehicle acquisition opportunities annually, Cars.com’s AccuTrade technology enables dealers to efficiently value and acquire inventory, he added.
  • Accu-Trade’s VIN-specific valuation and appraisal technology provide full transparency on vehicle valuation delivering accurate appraisal values that leverage real-time market data.
  • Prestopino noted Cars.com’s financial results and long-term outlook continue to improve, yet this improvement is not being reflected in the valuation of the stock.
  • Price Action: CARS shares are trading lower by 0.27% at $14.81 on the last check Monday.
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