Group 1 - CarGurus (CARG) is outperforming its peers in the Auto-Tires-Trucks sector with a year-to-date gain of approximately 16% compared to an average loss of 13.3% for the sector [4] - The Zacks Consensus Estimate for CarGurus' full-year earnings has increased by 19.5% over the past quarter, indicating a stronger analyst sentiment and improving earnings outlook [4] - CarGurus holds a Zacks Rank of 1 (Strong Buy), suggesting it has characteristics that may lead to outperformance in the market over the next one to three months [3] Group 2 - CarGurus is part of the Automotive - Replacement Parts industry, which ranks 9 in the Zacks Industry Rank, and this industry has experienced an average loss of 4.4% year-to-date [6] - General Motors (GM), another stock in the Auto-Tires-Trucks sector, has a year-to-date return of 29.3% and a Zacks Rank of 2 (Buy) [5] - The Automotive - Domestic industry, which includes General Motors, is ranked 141 and has seen a decline of 13% since the beginning of the year [7]

Company Overview - CarGurus, Inc. is an online automotive marketplace that connects buyers and sellers of new and used cars, utilizing proprietary technology, search algorithms, and data analytics [3]. - The company primarily operates in Canada, the United Kingdom, and Germany [3]. Industry Analysis - The Automotive – Replacement Parts industry is ranked in the Top 3% of the Zacks Industry Rank [4]. - Although CarGurus is categorized within this industry, its underlying business model may not fully align with traditional replacement parts companies [4]. Earnings Estimates - CarGurus has received a Zacks Rank 1 (Strong Buy) due to several analysts increasing their earnings estimates for the current and next year [4]. - Over the past thirty days, six analysts have raised their earnings estimates for the current year, while four have done so for the next year [4]. - The Zacks Consensus Estimate for the current year has increased from $1.45 to $1.62, and for the next year, it has risen from $1.75 to $1.88 [4]. Growth Projections - Current year EPS growth is projected at 31.71%, while next year's growth is estimated at 15.64% [5]. - This growth is occurring alongside a revenue contraction of 3.4% this year, with forecasted revenue growth of 8.2% next year [5].

Core Viewpoint - CarGurus (CARG) is positioned as a strong investment opportunity due to its improving earnings outlook and positive analyst sentiment, which is reflected in rising earnings estimates [1][2]. Estimate Revisions - The trend in estimate revisions indicates growing analyst optimism regarding CarGurus' earnings prospects, which is expected to positively influence its stock price [2]. - For the current quarter, CarGurus is projected to earn $0.43 per share, marking a year-over-year increase of +26.47%. The Zacks Consensus Estimate has risen by 23.23% over the last 30 days, with five estimates moving higher and no negative revisions [4]. - For the full year, the earnings estimate is $1.62 per share, representing a +31.71% change from the previous year. The consensus estimate has increased by 19.46%, with six estimates moving higher and no negative revisions [5]. Zacks Rank - CarGurus has achieved a Zacks Rank 1 (Strong Buy) due to favorable estimate revisions, which historically correlate with significant outperformance compared to the S&P 500 [6]. - Stocks with a Zacks Rank 1 and 2 are shown to significantly outperform the S&P 500, indicating strong potential for CarGurus [6]. Stock Performance - The stock has appreciated by 12.7% over the past four weeks, driven by strong estimate revisions and increased investor interest, suggesting further upside potential [7].

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell higher, with the expectation that established trends will continue [1][2]. 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]. Price Performance - Over the past week, CarGurus shares increased by 4.97%, outperforming the Zacks Automotive - Replacement Parts industry, which rose by 3.04% [5]. - In a longer timeframe, CARG's shares have appreciated by 12.74% over the past month, compared to the industry's 10.9% [5]. - Over the last quarter, CARG shares have surged by 21.59%, and over the past year, they have gained 55.48%, while the S&P 500 only increased by 5.9% and 29.32%, respectively [6]. Trading Volume - The average 20-day trading volume for CarGurus is 924,793 shares, which serves as a bullish indicator when combined with rising stock prices [7]. Earnings Outlook - In the last two months, 6 earnings estimates for CarGurus have been revised upwards, while none have been lowered, raising the consensus estimate from $1.45 to $1.62 [9]. - For the next fiscal year, 4 estimates have increased, while 2 have decreased during the same period [9]. Conclusion - Given the strong momentum indicators 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 [9].

Core Viewpoint - CarGurus (CARG) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Movement - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often rely on earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [4]. CarGurus Earnings Outlook - For the fiscal year ending December 2024, CarGurus is expected to earn $1.62 per share, reflecting a 31.7% increase from the previous year [8]. - Over the past three months, the Zacks Consensus Estimate for CarGurus has risen by 19.5%, indicating a positive trend in earnings expectations [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - The upgrade of CarGurus to Zacks Rank 1 places it in the top 5% of Zacks-covered stocks, suggesting potential for higher stock prices in the near term [10].

Group 1 - Qifu Technology, Inc. (QFIN) has seen a 17.9% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Sumitomo Mitsui Financial Group, Inc. (SMFG) has experienced a 19% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [1] - Robinhood Markets, Inc. (HOOD) has seen a significant 35.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - Nova Ltd. (NVMI) has experienced a 13.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [2] - CarGurus, Inc. (CARG) has seen an 11.7% increase in the Zacks Consensus Estimate for its current year earnings over the last 60 days [3]

Financial Data and Key Metrics Changes - Consolidated revenue for Q2 2024 was $219 million, down 9% year-over-year, primarily due to lower wholesale and product volumes, partially offset by a double-digit expansion in the marketplace business [23] - Non-GAAP consolidated adjusted EBITDA grew 23% year-over-year to $55.6 million, with a margin expansion of approximately 650 basis points to 25% [27] - Non-GAAP gross profit was $183 million, up 8% year-over-year, with a gross margin of 84%, an increase from 71% in the prior year [26] Business Line Data and Key Metrics Changes - Marketplace revenue was $195 million for Q2 2024, up 14% year-over-year, driven by subscription-based listings revenue growth of $23 million [24] - Marketplace adjusted EBITDA grew 49% year-over-year to approximately $61 million, with margins expanding due to revenue growth and operating cost leverage [27] - Digital wholesale revenue was $13 million, down 59% year-over-year, reflecting a decline in dealer-to-dealer transaction volume [25] Market Data and Key Metrics Changes - International business revenue grew 21% year-over-year, driven by an expansion in the dealer base and increased traffic [25] - The U.S. customer base is increasingly shifting towards larger dealers with higher advertising budgets, leading to sustained revenue growth [7] Company Strategy and Development Direction - The company is focused on enhancing its subscription-based marketplace and deepening partnerships with dealers by integrating services into their daily operations [5] - Continued investment in product innovation and data analytics is aimed at improving dealer performance and consumer experience [12][14] - The company aims to build an end-to-end transaction-enabled platform to support dealers and consumers throughout the car ownership journey [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the marketplace's growth momentum and the effectiveness of their product offerings in driving dealer engagement [22] - The company anticipates continued revenue growth in the marketplace segment for Q3 2024, with guidance of $199 million to $204 million [30] - Management acknowledged challenges in the digital wholesale segment but remains committed to rebuilding and integrating wholesale and retail insights [21] Other Important Information - A non-cash goodwill impairment charge of $127 million was recognized related to the CarOffer business, which does not impact cash flow or ongoing operations [28] - The company ended Q2 2024 with $216 million in cash and cash equivalents, a decrease of $30 million from the previous quarter [29] Q&A Session Summary Question: Impact of CDK outage on revenue and EBITDA - Management reported no impact from the CDK outage on revenue or billing for Q2 and does not anticipate any carryover impact for Q3 [33] Question: Status of CarOffer and future volume ramp-up - Management indicated that restructuring the sales organization and improving product integration are ongoing, with no specific timeline provided for volume ramp-up [34] Question: Insights on higher adoption of add-on products - Management noted that increased adoption is due to better product insights and education for dealers, leading to improved performance on the platform [37][38] Question: Drivers of pricing momentum from dealers - Management highlighted that higher dealer sign-ups and upgrades to premium tiers are contributing to pricing momentum, alongside a growing suite of non-lead value products [44] Question: OEM advertising revenue clarity - Management expressed pride in the growth of OEM advertising revenue, driven by increased new vehicle inventory and direct advertising requests from OEMs [63]

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Core Viewpoint - CarGurus reported a revenue decline of 8.8% year-over-year for Q2 2024, but exceeded revenue and EPS estimates, indicating some resilience in performance despite overall revenue drop [1]. Financial Performance - Revenue for the quarter ended June 2024 was $218.69 million, down from the previous year [1]. - EPS for the quarter was $0.41, an increase from $0.29 in the same quarter last year [1]. - The reported revenue was a surprise of +1.79% over the Zacks Consensus Estimate of $214.85 million [1]. - The EPS surprise was +20.59% compared to the consensus estimate of $0.34 [1]. Key Metrics - Total Paying Dealers: 31,352, exceeding the average estimate of 31,141 [3]. - Paying Dealers in the U.S.: 24,446, slightly below the average estimate of 24,502 [4]. - Paying Dealers Internationally: 6,906, surpassing the average estimate of 6,778 [5]. - Marketplace Revenue: $195.17 million, above the average estimate of $191.46 million, representing a year-over-year increase of +14.2% [6]. - Wholesale Revenue: $13.12 million, below the average estimate of $13.60 million, showing a significant year-over-year decline of -58.9% [7]. - Product Revenue: $10.41 million, exceeding the estimate of $9.98 million, but reflecting a substantial year-over-year decrease of -71.8% [8]. Stock Performance - CarGurus shares have returned -11.3% over the past month, compared to the Zacks S&P 500 composite's -6.5% change [8]. - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [8].

Core Insights - CarGurus (CARG) reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.34 per share, and up from $0.29 per share a year ago, representing an earnings surprise of 20.59% [1] - The company posted revenues of $218.69 million for the quarter ended June 2024, surpassing the Zacks Consensus Estimate by 1.79%, but down from $239.74 million year-over-year [2] - CarGurus has outperformed consensus EPS estimates three times in the last four quarters and has also topped revenue estimates three times during the same period [2] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.37 on revenues of $219.58 million, and for the current fiscal year, it is $1.45 on revenues of $873.27 million [7] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Automotive - Replacement Parts industry, to which CarGurus belongs, is currently ranked in the top 15% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]