Core Viewpoint - Growth stocks are appealing due to their potential for above-average financial growth, but identifying those that can fulfill their potential is challenging [1] Group 1: Company Overview - CarGurus (CARG) is highlighted as a recommended growth stock with a favorable Growth Score and a top Zacks Rank [2] - The company has a historical EPS growth rate of 3.7%, but projected EPS growth for this year is expected to be 25.1%, significantly higher than the industry average of 15.6% [5] Group 2: Financial Metrics - CarGurus exhibits a year-over-year cash flow growth of 183.6%, far exceeding the industry average of 6.6% [6] - The annualized cash flow growth rate for CarGurus over the past 3-5 years is 39.8%, compared to the industry average of 4.7% [7] Group 3: Earnings Estimates - The current-year earnings estimates for CarGurus have been revised upward, with the Zacks Consensus Estimate increasing by 23.9% over the past month [8] - CarGurus has achieved a Growth Score of A and a Zacks Rank 1 due to positive earnings estimate revisions, indicating strong potential for growth investors [10]

CarGurus (CARG) FY Conference Summary Company Overview - CarGurus operates as an online automotive marketplace, competing primarily with Cars.com and Auto Trader, offering a freemium model that provides transparency and a wide selection of vehicles [2][4] - The company has built a two-sided marketplace, achieving the largest consumer audience in the online automotive space, which has led to significant growth [5][6] Core Business Model - CarGurus employs a subscription model where dealers pay monthly for various products, with a focus on expanding services throughout the consumer lifecycle and dealer workflow [7][9] - The company has shifted from merely selling leads to a more consultative partnership with dealers, providing insights and analytics to enhance dealer performance [11][12] Financial Performance - Recent quarters have shown acceleration in the core listings business, with the highest dealer count growth in a long time [15][17] - The average revenue per subscribing dealer (CAR SID) has been increasing due to new product introductions and upselling existing customers [18][19] - Dealers spend approximately $12 billion to $14 billion on digital advertising, with CarGurus capturing about 4% of that market [25][26] Market Dynamics - The used car market remains a significant focus, with over 90% of leads directed towards used vehicles, while new car sales are described as more commoditized [43][44] - Insights provided by CarGurus help dealers optimize pricing and inventory management, especially during periods of market uncertainty [45][46] Strategic Initiatives - The acquisition of CarOffer, a digital wholesale platform, aims to enhance the sourcing capabilities for dealers, although it has faced challenges in adapting to market volatility [28][33] - CarGurus is expanding its international presence, particularly in Canada and the UK, where it is growing rapidly and is recognized as a top ROI provider for dealers [52][54] Competitive Landscape - CarGurus has been gaining market share in a slow-growing category, attributed to its innovative product offerings and strong dealer relationships [48] - The company is investing in technology and product development, leveraging AI to enhance productivity and introduce new features [49] Future Outlook - The company is focused on long-term contracts with dealers, with 40% of new contracts being six to twelve months in duration, indicating a shift towards deeper partnerships [56] - CarGurus is also enhancing its new car experience to provide more options for consumers, thereby increasing dealer engagement [58][59]

Core Insights - CarGurus, Inc. is the leading digital auto platform for shopping, buying, and selling new and used vehicles, with a scheduled participation in a fireside chat at William Blair's 45th Annual Growth Stock Conference on June 3, 2025 [1][2] Company Overview - CarGurus operates as a multinational online automotive platform, enhancing its listings marketplace with digital retail solutions and the CarOffer online wholesale platform [3] - The platform provides consumers with confidence in purchasing and selling vehicles, while enabling dealerships to accurately price, market, acquire, and sell vehicles effectively [3] - CarGurus is recognized as the most visited automotive shopping site in the U.S., with additional operations in Canada and the U.K., as well as independent brands like Autolist and PistonHeads [3][4]

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1] Company Overview: CarGurus (CARG) - CarGurus currently holds a Momentum Style Score of A, indicating strong momentum characteristics [2] - The company has a Zacks Rank of 1 (Strong Buy), suggesting a favorable outlook compared to the market [3] Performance Metrics - Over the past week, CarGurus shares increased by 4.44%, while the Zacks Automotive - Replacement Parts industry rose by 5.16% [5] - In a longer timeframe, CarGurus shares have appreciated by 1.12% over the past quarter and 33.05% over the last year, outperforming the S&P 500, which saw declines of -2.56% and gains of 11.12% respectively [6] Trading Volume - The average 20-day trading volume for CarGurus is 1,038,208 shares, which serves as a bullish indicator when combined with rising stock prices [7] Earnings Outlook - In the last two months, five earnings estimates for CarGurus have been revised upwards, increasing the consensus estimate from $1.85 to $2.15 [9] - For the next fiscal year, five estimates have also moved higher, with no downward revisions noted [9] Conclusion - Given the strong performance metrics and positive earnings outlook, CarGurus is positioned as a 1 (Strong Buy) stock with a Momentum Score of A, making it a compelling investment option [11]

Core Viewpoint - Investors are increasingly seeking growth stocks that demonstrate above-average growth potential, with CarGurus identified as a strong candidate due to its favorable growth metrics and Zacks Rank [1][2]. Earnings Growth - CarGurus has a historical EPS growth rate of 3.7%, but projected EPS growth for this year is expected to be 25.1%, significantly outperforming the industry average of 15.4% [4]. Cash Flow Growth - The year-over-year cash flow growth for CarGurus stands at an impressive 183.6%, far exceeding the industry average of 6.6% [5]. - Over the past 3-5 years, the annualized cash flow growth rate for CarGurus has been 39.8%, compared to the industry average of 4.7% [6]. Earnings Estimate Revisions - The current-year earnings estimates for CarGurus have been revised upward, with the Zacks Consensus Estimate increasing by 23.9% over the past month, indicating a positive trend in earnings estimate revisions [7]. Conclusion - CarGurus has achieved a Growth Score of A and holds a Zacks Rank 1, suggesting it is a potential outperformer and a solid choice for growth investors [8][9].

Core Viewpoint - CarGurus (CARG) is positioned as a strong investment opportunity due to its improving earnings outlook and analysts raising earnings estimates [1][2] Estimate Revisions - Analysts show growing optimism for CarGurus' earnings prospects, reflected in upward revisions of earnings estimates, which historically correlate with stock price movements [2] - The current-quarter earnings estimate is projected at $0.54 per share, indicating a year-over-year increase of +31.71%, with a 33.96% rise in consensus estimates over the last 30 days [6] - For the full year, the earnings estimate stands at $2.15 per share, representing a +25% change from the previous year, with similar positive revisions noted [7] Zacks Rank - CarGurus holds a Zacks Rank 1 (Strong Buy), indicating strong agreement among analysts on upward earnings revisions, which historically leads to significant outperformance [3][8] - Stocks with Zacks Rank 1 and 2 have shown to significantly outperform the S&P 500 [8] Stock Performance - The stock has gained 20.3% over the past four weeks, driven by solid estimate revisions and positive earnings growth prospects [9]

Summary of CarGurus (CARG) FY Conference Call - May 13, 2025 Company Overview - CarGurus is the largest online marketplace for consumers and dealers to buy and sell automobiles, providing a transparent and unbiased automotive marketplace [2][3] - The company operates in the US, UK, and Canada, with a focus on enhancing dealer and consumer experiences through various functionalities [4] Key Business Insights - CarGurus has shifted from a traditional lead generation tool to a comprehensive dealer solutions provider, offering predictive intelligence and insights to improve dealer workflows [5][6] - The primary business model is subscription-based, with metrics focusing on the number of paying customers and average revenue per customer [4][5] Recent Trends and Performance - Increased engagement from dealers has been noted, with a focus on using intelligence and insights to improve retention and product stickiness [5][6] - The company has seen a significant increase in net dealer ads, attributed to better retention and the introduction of new product features [29][30] - A flight to quality is observed in the market, with dealers consolidating their partnerships with market leaders like CarGurus during uncertain times [32][35] Pricing Strategy - CarGurus maintains a value-driven pricing strategy, focusing on building long-term relationships with dealers rather than aggressively raising prices [12][15] - The average revenue per subscribing dealer has grown, with various levers for growth including upselling and cross-selling products [16][17] Innovation and AI Integration - The company is investing heavily in product and engineering, particularly in AI to enhance consumer and dealer experiences [18][19] - AI is being utilized across various functions, including predictive pricing intelligence and lead handling, to improve conversion rates for dealers [20][22][24] Market Dynamics - The marketplace currently has a balanced inventory of new and used cars, with a stronger value proposition for used cars due to consumer information disadvantages [53] - The used car market is less volatile compared to the new car market, providing a more stable environment for CarGurus [54][56] Capital Allocation and Future Growth - CarGurus is focused on investing in product innovation and exploring M&A opportunities, particularly in dealer software and data products [67][68] - The company has executed a sizable share buyback, reflecting confidence in its growth prospects [66][68] Guidance and Market Outlook - Despite macroeconomic uncertainties, CarGurus has provided a double-digit revenue growth outlook, supported by a stable subscription model and diverse customer base [42][46] - The company emphasizes the importance of online marketing channels, particularly third-party marketplaces, as a safe investment for dealers [46][47] Conclusion - CarGurus is positioned as a leader in the automotive marketplace, leveraging technology and insights to enhance dealer and consumer experiences while maintaining a focus on long-term partnerships and sustainable growth [35][39]

Group 1 - Major trade deals are positively impacting market sentiment, with major indices recovering nearly all losses since the announcement of tariffs [1] - Investors are advised to remain cautious despite the optimistic market outlook [1] - The technology sector is influenced by various themes, as highlighted by the experience of industry analysts [1] Group 2 - The article emphasizes the importance of focusing on industry trends and potential investment opportunities [1]

Core Viewpoint - CarGurus reported quarterly earnings of $0.46 per share, exceeding the Zacks Consensus Estimate of $0.42 per share, and showing an increase from $0.32 per share a year ago, indicating a positive earnings surprise of 9.52% [1] Financial Performance - The company posted revenues of $225.16 million for the quarter ended March 2025, which was a slight miss compared to the Zacks Consensus Estimate by 0.79%, but an increase from $215.8 million year-over-year [2] - Over the last four quarters, CarGurus has surpassed consensus EPS estimates four times and topped revenue estimates two times [2] Stock Performance - CarGurus shares have declined approximately 22.4% since the beginning of the year, contrasting with the S&P 500's decline of 4.3% [3] - The current Zacks Rank for CarGurus is 3 (Hold), suggesting that the shares are expected to perform in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44 on revenues of $232.81 million, and for the current fiscal year, it is $1.85 on revenues of $942.76 million [7] - The estimate revisions trend for CarGurus is mixed, and future stock movements may depend on management's commentary during the earnings call [3][4] Industry Context - The Automotive - Replacement Parts industry, to which CarGurus belongs, is currently ranked in the top 15% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Financial Data and Key Metrics Changes - First quarter revenue was $225 million, up 4% year over year, slightly below the midpoint of guidance due to lower wholesale and product volumes [28] - Marketplace revenue was $212 million, up 13% year over year, driven by strength in subscription-based listings and OEM advertising revenue [28][29] - Non-GAAP gross profit was $200 million, up 14% year over year, with a non-GAAP gross margin of 89%, reflecting a shift towards high-margin Marketplace business [31][32] - Non-GAAP diluted earnings per share was $0.46, up 35% year over year, primarily due to increased adjusted EBITDA and lower diluted share count [35] Business Line Data and Key Metrics Changes - Marketplace revenue growth was driven by dealer count growth, subscription tier upgrades, and increased adoption of value-added products [9] - International revenue expanded 20% year over year, supported by traffic growth and lead growth in Canada and the UK [9][10] - Wholesale revenue was approximately $8 million, down 52% year over year, due to a decline in digital wholesale segment transaction volumes [31] Market Data and Key Metrics Changes - In Canada, 90% of surveyed dealers reported better ROI on CarGurus compared to alternative platforms, indicating strong market positioning [10] - CarGurus was the most downloaded auto app in Canada in Q1, contributing to an 85% year over year increase in direct traffic [10] - The company experienced a 20% year over year growth in direct traffic, reinforcing its position as the most visited listing site [21] Company Strategy and Development Direction - The company is focusing on "transformative innovation" in 2025, emphasizing customer-centric and AI-driven product development [6][7] - Strategic drivers include expanding data-driven solutions for dealers, enhancing the car shopping journey for consumers, and enabling more online transactions [7][8] - The company is assessing its wholesale business model to identify sustainable growth and profitability potential [26] Management's Comments on Operating Environment and Future Outlook - Management noted that while the market remains volatile, they have not seen a material impact on business related to tariffs [36] - The company anticipates exiting the year with low double-digit year-over-year growth rates, despite potential shifts in market conditions [36] - Management expressed confidence in the strength of their marketplace and the value of their insights capabilities amid market uncertainty [66] Other Important Information - The company added 734 paying U.S. dealers year over year, marking the highest dealer growth since pre-pandemic [29] - Digital Deal now accounts for over 25% of a dealer's email leads, indicating strong adoption and engagement [24] - The company ended the first quarter with $173 million in cash and cash equivalents, primarily impacted by share repurchases [35] Q&A Session Summary Question: Amazon's entry into the used vehicle market - Management acknowledged awareness of Amazon's activities but emphasized the complexity and trust required in the used vehicle market, which they believe is a strength for CarGurus [44] Question: OEM ad spending trends - Management expressed pride in Q1 results but acknowledged caution among OEMs due to tariffs, while maintaining a positive outlook on their advertising business [50] Question: Changes needed for CarOffer - Management discussed the need for operational efficiency and flexibility in the CarOffer platform to adapt to market volatility and improve profitability [53][55] Question: Revenue growth drivers - Management clarified that revenue growth is driven by both dealer count and revenue per dealer, with a significant increase in dealer additions this quarter [61] Question: Impact of tariffs on spending patterns - Management indicated that they have not seen a change in spending patterns due to tariffs, despite the prevailing uncertainty in the market [69]