Don't overlook NASDAQ:CARG—a stock with solid growth prospects and a reasonable valuation.

Our stock screener has spotted CARGURUS INC (NASDAQ:CARG) as a growth stock which is not overvalued. NASDAQ:CARG is scoring great on several growth aspects while it also shows decent health and profitability. At the same time it remains remains attractively priced. We'll dive into each aspect below.

A Closer Look at Growth for NASDAQ:CARG

ChartMill employs its own Growth Rating system for all stocks. This score, ranging from 0 to 10, is derived by evaluating different growth factors, such as EPS and revenue growth, taking into account both past performance and future projections. NASDAQ:CARG has earned a 7 for growth:

• CARG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 28.71%, which is quite impressive.
• Measured over the past years, CARG shows a very strong growth in Earnings Per Share. The EPS has been growing by 31.95% on average per year.
• Measured over the past years, CARG shows a quite strong growth in Revenue. The Revenue has been growing by 15.02% on average per year.
• The Earnings Per Share is expected to grow by 22.69% on average over the next years. This is a very strong growth
• CARG is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 14.42% yearly.

Valuation Examination for NASDAQ:CARG

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NASDAQ:CARG has received a 5 out of 10:

• Based on the Price/Earnings ratio, CARG is valued a bit cheaper than 76.12% of the companies in the same industry.
• Compared to an average S&P500 Price/Earnings ratio of 28.20, CARG is valued a bit cheaper.
• Based on the Price/Forward Earnings ratio, CARG is valued a bit cheaper than 71.64% of the companies in the same industry.
• When comparing the Price/Forward Earnings ratio of CARG to the average of the S&P500 Index (20.02), we can say CARG is valued slightly cheaper.
• Based on the Enterprise Value to EBITDA ratio, CARG is valued a bit cheaper than the industry average as 61.19% of the companies are valued more expensively.
• The decent profitability rating of CARG may justify a higher PE ratio.
• CARG's earnings are expected to grow with 17.54% in the coming years. This may justify a more expensive valuation.

Analyzing Health Metrics

To gauge a stock's financial health, ChartMill utilizes a Health Rating on a scale of 0 to 10. This comprehensive evaluation encompasses liquidity and solvency, both in absolute terms and in comparison to industry peers. NASDAQ:CARG has earned a 9 out of 10:

• CARG has an Altman-Z score of 6.94. This indicates that CARG is financially healthy and has little risk of bankruptcy at the moment.
• CARG has a better Altman-Z score (6.94) than 85.07% of its industry peers.
• There is no outstanding debt for CARG. This means it has a Debt/Equity and Debt/FCF ratio of 0 and it is amongst the best of the sector and industry.
• CARG has a Current Ratio of 2.78. This indicates that CARG is financially healthy and has no problem in meeting its short term obligations.
• A Quick Ratio of 2.78 indicates that CARG has no problem at all paying its short term obligations.

Profitability Examination for NASDAQ:CARG

ChartMill employs its own Profitability Rating system for stock evaluation. This score, ranging from 0 to 10, is derived from an analysis of diverse profitability metrics and margins. In the case of NASDAQ:CARG, the assigned 6 is noteworthy for profitability:

• With a decent Return On Assets value of 4.16%, CARG is doing good in the industry, outperforming 71.64% of the companies in the same industry.
• Looking at the Return On Equity, with a value of 6.38%, CARG is in the better half of the industry, outperforming 73.13% of the companies in the same industry.
• CARG has a better Return On Invested Capital (4.69%) than 74.63% of its industry peers.
• The 3 year average ROIC (9.65%) for CARG is well above the current ROIC(4.69%). The reason for the recent decline needs to be investigated.
• CARG's Profit Margin of 4.04% is fine compared to the rest of the industry. CARG outperforms 67.16% of its industry peers.
• Looking at the Operating Margin, with a value of 4.99%, CARG is in the better half of the industry, outperforming 67.16% of the companies in the same industry.
• With a decent Gross Margin value of 74.76%, CARG is doing good in the industry, outperforming 65.67% of the companies in the same industry.

Our Affordable Growth screener lists more Affordable Growth stocks and is updated daily.

Check the latest full fundamental report of CARG for a complete fundamental analysis.

Keep in mind

This is not investing advice! The article highlights some of the observations at the time of writing, but you should always make your own analysis and invest based on your own insights.