FY26 Adjusted EBITDA Margin Sees 1.5%-2.5% Decrease
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 6 hours ago
0mins
Should l Buy CARG?
Sees FY26 adjusted EBITDA margin down 1.5%-2.5%.
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Analyst Views on CARG
Wall Street analysts forecast CARG stock price to rise
9 Analyst Rating
6 Buy
3 Hold
0 Sell
Moderate Buy
Current: 28.300
Low
40.00
Averages
42.38
High
45.00
Current: 28.300
Low
40.00
Averages
42.38
High
45.00
About CARG
CarGurus, Inc. (CarGurus) offers a multinational, online automotive platform for buying and selling vehicles that offer both digital retail solutions and the CarOffer digital wholesale platform. The CarGurus platform enables consumers to purchase and/or sell a vehicle either online or in-person, and it gives dealerships the power to accurately price, instantly acquire, effectively market, and quickly sell vehicles, all with a nationwide reach. It operates through two segments: U.S. Marketplace and Digital Wholesale. The U.S. Marketplace segment provides marketplace services for customers within the United States. Digital Wholesale segment provides Dealer-to-Dealer and Instant Max Cash Offer (IMCO) services and products which are sold on the CarOffer platform. The Company operates online marketplaces under the CarGurus brand in Canada and the United Kingdom. It also operates independent brands, the Autolist and PistonHeads online marketplaces in the United States and the United Kingdom.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
CarGurus Q4 2025 Earnings Call Highlights
- Significant Revenue Growth: CarGurus reported Q4 2025 revenue of $241 million, a 15% year-over-year increase, with full-year revenue reaching $907 million, up 14%, indicating strong market performance and profitability.
- Accelerated International Expansion: The international segment saw Q4 revenue grow by 32% year-over-year and 27% for the full year, driven by accelerated dealer acquisitions and increased wallet share, further solidifying CarGurus' position in the global market.
- Innovative Product Launches: The company launched more new products in 2025 than in any prior year, with expectations for these monetized dealer products to grow approximately 15x in 2026, achieving eight-figure revenue levels, reflecting strong confidence in product innovation and market demand.
- Share Repurchase Program: CarGurus repurchased about $350 million in shares in 2025 and announced a new $250 million share repurchase program, demonstrating confidence in its value and commitment to shareholders.
See More
CarGurus Releases 2026 Financial Guidance
- Earnings Report: CarGurus reported a Q4 non-GAAP EPS of $0.63, meeting expectations, while revenue reached $241.1 million, reflecting a 14.7% year-over-year increase and exceeding forecasts by $2.03 million, indicating stable growth in a competitive market.
- Stock Reaction: Despite strong earnings, CarGurus shares fell 4.35%, suggesting market caution regarding future growth, potentially influenced by broader economic conditions and industry trends.
- Q1 2026 Guidance: The company projects Q1 2026 total revenue between $240.5 million and $245.5 million, with non-GAAP adjusted EBITDA expected to range from $72 million to $80 million, reflecting management's optimistic outlook for future performance.
- Annual Outlook: CarGurus anticipates a 10% to 13% year-over-year revenue increase for 2026, although non-GAAP adjusted EBITDA margin is expected to decline by 1.5% to 2.5%, indicating potential pressure on profitability despite revenue growth.
See More
CarGurus Stock Outlook Analysis
- Analyst Rating Adjustment: Needham lowered the price target for CarGurus from $44 to $37 while maintaining a Buy rating, indicating that despite concerns about the company being replaced, the analyst believes these fears are exaggerated, reflecting confidence in the company's future performance.
- Brand Campaign Expansion: On February 11, CarGurus announced the expansion of its 'Big Deal' brand campaign, featuring AI-driven innovations designed to simplify online research and comparison, helping consumers make more personalized and confident decisions at dealerships, thereby enhancing user experience.
- Market Position Reinforcement: As the most visited car shopping site, CarGurus continues to invest in innovations to improve consumer transparency and confidence, with CMO Dafna Sarnoff emphasizing the company's commitment to redefining the car shopping experience, which strengthens its competitive position in the market.
- Investment Potential Assessment: While slightly more than half of analysts rate CarGurus as a Buy, with a one-year median price target of $40.50 indicating a 48.13% upside potential, some opinions suggest that certain AI stocks offer greater upside potential and carry less downside risk.
See More
CarGurus to Announce Q4 Earnings on February 19
- Earnings Announcement: CarGurus (CARG) is set to release its Q4 2023 earnings report on February 19 after market close, with consensus EPS estimates at $0.63, reflecting a 14.5% year-over-year growth, indicating sustained profitability.
- Revenue Expectations: The anticipated revenue for Q4 is $239.07 million, representing a 4.6% year-over-year increase, which highlights CarGurus' ability to maintain stable revenue growth in a competitive automotive market, despite a slight slowdown.
- Historical Performance: Over the past two years, CarGurus has exceeded EPS estimates 100% of the time and has surpassed revenue estimates 63% of the time, demonstrating strong financial forecasting capabilities and market confidence.
- Estimate Revision Trends: In the last three months, EPS estimates have seen two upward revisions and one downward revision, while revenue estimates have also experienced two upward and one downward revision, indicating some divergence in analysts' outlook on the company's future performance.
See More
Alta Fox Acquires $44 Million Stake in Resideo Technologies
- New Investment Position: Alta Fox Capital Management disclosed a new position in Resideo Technologies by acquiring 1,266,700 shares in Q4 2026, with an estimated transaction value of $44.49 million, indicating strong confidence in the company's future prospects.
- Significant Asset Allocation: This acquisition accounts for 9.57% of Alta Fox's 13F reportable assets, reflecting the fund's preference for concentrated investment strategies, which may further enhance Resideo's market performance.
- Strong Financial Performance: Resideo reported $1.86 billion in revenue for Q3, a year-over-year increase of approximately 2%, while net income surged to $156 million, up 680%, showcasing a remarkable improvement in profitability.
- Positive Future Outlook: The company updated its 2025 revenue guidance to between $7.43 billion and $7.47 billion, coupled with ongoing gross margin expansion, indicating strong competitive positioning and growth potential in the market.
See More
U.S. Retail Sales Rise 0.6% Month-over-Month in November
- Retail Sales Growth: According to the U.S. Census Bureau, retail sales rose 0.6% month-over-month in November and were up 3.3% year-over-year, exceeding economists' expectations of 0.4%, indicating consumer spending resilience that could positively impact GDP.
- Strong Clothing Sales: Clothing stores saw a 7.5% year-over-year increase, providing positive signals for mall retailers like Gap and Urban Outfitters, suggesting enhanced consumer potential during the holiday season.
- Outstanding Nonstore Retail Performance: The nonstore retail category outperformed with a 7.2% year-over-year increase in November, crucial for e-commerce players like Amazon and Wayfair, reflecting strong demand during the holiday shopping season.
- Underperformance in Auto Dealers: The auto dealer group experienced a 1.1% year-over-year decline in November, indicating challenges for the sector that may affect the performance of related companies.
See More
CarGurus Q4 2025 Earnings Call Highlights
- Significant Revenue Growth: CarGurus reported Q4 2025 revenue of $241 million, a 15% year-over-year increase, with full-year revenue reaching $907 million, up 14%, indicating strong market performance and profitability.
- Accelerated International Expansion: The international segment saw Q4 revenue grow by 32% year-over-year and 27% for the full year, driven by accelerated dealer acquisitions and increased wallet share, further solidifying CarGurus' position in the global market.
- Innovative Product Launches: The company launched more new products in 2025 than in any prior year, with expectations for these monetized dealer products to grow approximately 15x in 2026, achieving eight-figure revenue levels, reflecting strong confidence in product innovation and market demand.
- Share Repurchase Program: CarGurus repurchased about $350 million in shares in 2025 and announced a new $250 million share repurchase program, demonstrating confidence in its value and commitment to shareholders.
See More
CarGurus Releases 2026 Financial Guidance
- Earnings Report: CarGurus reported a Q4 non-GAAP EPS of $0.63, meeting expectations, while revenue reached $241.1 million, reflecting a 14.7% year-over-year increase and exceeding forecasts by $2.03 million, indicating stable growth in a competitive market.
- Stock Reaction: Despite strong earnings, CarGurus shares fell 4.35%, suggesting market caution regarding future growth, potentially influenced by broader economic conditions and industry trends.
- Q1 2026 Guidance: The company projects Q1 2026 total revenue between $240.5 million and $245.5 million, with non-GAAP adjusted EBITDA expected to range from $72 million to $80 million, reflecting management's optimistic outlook for future performance.
- Annual Outlook: CarGurus anticipates a 10% to 13% year-over-year revenue increase for 2026, although non-GAAP adjusted EBITDA margin is expected to decline by 1.5% to 2.5%, indicating potential pressure on profitability despite revenue growth.
See More
CarGurus Stock Outlook Analysis
- Analyst Rating Adjustment: Needham lowered the price target for CarGurus from $44 to $37 while maintaining a Buy rating, indicating that despite concerns about the company being replaced, the analyst believes these fears are exaggerated, reflecting confidence in the company's future performance.
- Brand Campaign Expansion: On February 11, CarGurus announced the expansion of its 'Big Deal' brand campaign, featuring AI-driven innovations designed to simplify online research and comparison, helping consumers make more personalized and confident decisions at dealerships, thereby enhancing user experience.
- Market Position Reinforcement: As the most visited car shopping site, CarGurus continues to invest in innovations to improve consumer transparency and confidence, with CMO Dafna Sarnoff emphasizing the company's commitment to redefining the car shopping experience, which strengthens its competitive position in the market.
- Investment Potential Assessment: While slightly more than half of analysts rate CarGurus as a Buy, with a one-year median price target of $40.50 indicating a 48.13% upside potential, some opinions suggest that certain AI stocks offer greater upside potential and carry less downside risk.
See More
CarGurus to Announce Q4 Earnings on February 19
- Earnings Announcement: CarGurus (CARG) is set to release its Q4 2023 earnings report on February 19 after market close, with consensus EPS estimates at $0.63, reflecting a 14.5% year-over-year growth, indicating sustained profitability.
- Revenue Expectations: The anticipated revenue for Q4 is $239.07 million, representing a 4.6% year-over-year increase, which highlights CarGurus' ability to maintain stable revenue growth in a competitive automotive market, despite a slight slowdown.
- Historical Performance: Over the past two years, CarGurus has exceeded EPS estimates 100% of the time and has surpassed revenue estimates 63% of the time, demonstrating strong financial forecasting capabilities and market confidence.
- Estimate Revision Trends: In the last three months, EPS estimates have seen two upward revisions and one downward revision, while revenue estimates have also experienced two upward and one downward revision, indicating some divergence in analysts' outlook on the company's future performance.
See More
Alta Fox Acquires $44 Million Stake in Resideo Technologies
- New Investment Position: Alta Fox Capital Management disclosed a new position in Resideo Technologies by acquiring 1,266,700 shares in Q4 2026, with an estimated transaction value of $44.49 million, indicating strong confidence in the company's future prospects.
- Significant Asset Allocation: This acquisition accounts for 9.57% of Alta Fox's 13F reportable assets, reflecting the fund's preference for concentrated investment strategies, which may further enhance Resideo's market performance.
- Strong Financial Performance: Resideo reported $1.86 billion in revenue for Q3, a year-over-year increase of approximately 2%, while net income surged to $156 million, up 680%, showcasing a remarkable improvement in profitability.
- Positive Future Outlook: The company updated its 2025 revenue guidance to between $7.43 billion and $7.47 billion, coupled with ongoing gross margin expansion, indicating strong competitive positioning and growth potential in the market.
See More
U.S. Retail Sales Rise 0.6% Month-over-Month in November
- Retail Sales Growth: According to the U.S. Census Bureau, retail sales rose 0.6% month-over-month in November and were up 3.3% year-over-year, exceeding economists' expectations of 0.4%, indicating consumer spending resilience that could positively impact GDP.
- Strong Clothing Sales: Clothing stores saw a 7.5% year-over-year increase, providing positive signals for mall retailers like Gap and Urban Outfitters, suggesting enhanced consumer potential during the holiday season.
- Outstanding Nonstore Retail Performance: The nonstore retail category outperformed with a 7.2% year-over-year increase in November, crucial for e-commerce players like Amazon and Wayfair, reflecting strong demand during the holiday shopping season.
- Underperformance in Auto Dealers: The auto dealer group experienced a 1.1% year-over-year decline in November, indicating challenges for the sector that may affect the performance of related companies.
See More
