Bear of the Day: Cars.com (CARS)
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Cars.com (CARS) is a small-cap operator of an online automotive platform. The company offers new and used vehicle listings, expert and consumer reviews, and research tools.
The Chicago-based firm is also engaged in the sale of display advertising to national advertisers.
The reason CARS fell into the cellar of the Zacks Rank is because EPS estimates dropped recently with the Zacks Consensus for this year slid 12% from $1.98 to $1.74.
The catalyst for this downward revision was the company's August 8 earnings release.
Still Profitable, But Slipping
Cars.com came out with quarterly earnings of $0.38 per share, missing the Zacks Consensus Estimate of $0.47 per share. This compares to earnings of $1.37 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of -19.15%. A quarter ago, it was expected that this online automotive marketplace would post earnings of $0.08 per share when it actually produced earnings of $0.01, delivering a surprise of -87.50%.
Over the last four quarters, the company has not been able to surpass consensus EPS estimates.
Cars.com, which belongs to the Zacks Internet - Commerce industry, posted revenues of $178.89 million for the quarter ended June 2024, missing the Zacks Consensus Estimate by 1.44%. This compares to year-ago revenues of $168.18 million.
The good news is that CARS has topped consensus revenue estimates three times over the last four quarters.
After the report, JPMorgan downgraded the stock to Neutral from Overweight and slashed their price target from $25 to $19.
Bottom line: While CARS shares are attractive on a P/E basis, investors should wait at least another quarter until estimates stop going down and stabilize. The Zacks Rank will let you know.
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Cars.com Inc. (CARS) : Free Stock Analysis Report