CarGurus Inc. (CARG) can make a big difference with a little luck

CarGurus Inc. (NASDAQ: CARG) stock fell -0.12% on Friday to $25.30 against a previous-day closing price of $25.33. With 1.14 million shares changed hands, the volume of the stock remained heavier than its average volume of 1.12 million shares. During the session, the Internet Content & Information company that operates in wider Communication Services sector, reached to the highest price of $25.95 whereas the lowest price it dropped to was $24.81. The 52-week range on CARG shows that it touched its highest point at $50.03 and its lowest point at $20.15 during that stretch. It currently has a 1-year price target of $38.25. Beta for the stock currently stands at 1.58.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of CARG was up-trending over the past week, with a rise of 2.72%, but this was up by 13.86% over a month. Three-month performance dropped to -31.73% while six-month performance fell -24.72%. The stock lost -12.64% in the past year, while it has lost -24.79% so far this year. A look at the trailing 12-month EPS for CARG yields -0.73 with Next year EPS estimates of 1.60. For the next quarter, that number is 0.31. This implies an EPS growth rate of -100.20% for this year and 18.19% for next year. EPS is expected to grow by 13.00% annually over the next five years; however, over the past five years, the company experienced an annual growth rate of 64.80%.

Float and Shares Shorts:

At present, 118.03 million CARG shares are outstanding with a float of 100.91 million shares on hand for trading. On Jul 14, 2022, short shares totaled 6.79 million, which was 5.73% higher than short shares on Jun 14, 2022. In addition to Mr. E. Langley Steinert as the firm’s Founder & Exec. Chairman, Mr. Jason M. Trevisan serves as its CEO & Director.

Institutional Ownership:

Through their ownership of 101.77% of CARG’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 46.43% of CARG, in contrast to 46.40% held by mutual funds. Shares owned by individuals account for 19.53%. As the largest shareholder in CARG with 13.80% of the stake, Wellington Management Co. LLP holds 14,128,717 shares worth 14,128,717. A second-largest stockholder of CARG, The Vanguard Group, Inc., holds 9,326,721 shares, controlling over 9.11% of the firm’s shares. Manulife Investment Management Lt is the third largest shareholder in CARG, holding 8,439,684 shares or 8.24% stake. With a 2.81% stake in CARG, the Vanguard Total Stock Market Index is the largest stakeholder. A total of 2,877,697 shares are owned by the mutual fund manager. The Hartford Mid Cap Fund, which owns about 2.67% of CARG stock, is the second-largest Mutual Fund holder. It holds 2,734,659 shares valued at 58.77 million. Vanguard Small Cap Index Fund holds 2.40% of the stake in CARG, owning 2,453,936 shares worth 52.74 million.

An Overview of Recent Financials:

Understanding a company as a customer does not mean you will understand it as an investor. The wise investor uses quantitative research to analyze metrics such as revenue, net income, and earnings. In its fiscal quarter reported on Mar 30, 2022, CARG reported revenue of $430.61M and operating income of $26.66M. Over the past year, revenue came in at $1.21B while operating income stood at $149.14M. It generated $19.91M net income for the quarter, which came to $106.79M over the last twelve months. The EBITDA in the recently reported quarter was $37.84M and diluted EPS was -$0.53. EBITDA for the full year was $192.13M.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for CARG since 12 analysts follow the stock currently. There are 9 analysts who recommend BUY ratings, while 0 suggest SELL ratings. Of the remaining analysts, 2 believe that the stock is worth HOLDING, 1 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With CARG analysts setting a high price target of $50.00 and a low target of $31.00, the average target price over the next 12 months is $37.82. Based on these targets, CARG could surge 97.63% to reach the target high and rise by 22.53% to reach the target low. Reaching the average price target will result in a growth of 49.49% from current levels.

EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. CARG will report FY 2022 earnings on 03/02/2023. Analysts have provided yearly estimates in a range of $1.61 being high and $1.17 being low. For CARG, this leads to a yearly average estimate of $1.35. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. CarGurus Inc. surprised analysts by $0.01 when it reported $0.36 EPS against a consensus estimate of $0.35. The surprise factor in the prior quarter was $0.13. Based on analyst estimates, the high estimate for the next quarter is $0.41 and the low estimate is $0.27. The average estimate for the next quarter is thus $0.31.

Summary of Insider Activity:

Insiders traded CARG stock several times over the past three months with 8 Buys and 10 Sells. In these transactions, 50,824 shares were bought while 53,261 shares were sold. The number of buy transactions has increased to 30 while that of sell transactions has risen to 324 over the past year. The total number of shares bought during that period was 1,295,984 while 2,475,686 shares were sold.

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