NASDAQ:CARG, a growth stock which is not overvalued.

CARGURUS INC (NASDAQ:CARG) was identified as an affordable growth stock by our stock screener. NASDAQ:CARG is showing great growth, but also scores well on profitability, solvency and liquidity. At the same time it seems to be priced reasonably. We'll explore this a bit deeper below.

Growth Analysis for NASDAQ:CARG

To evaluate a stock's growth potential, ChartMill utilizes a Growth Rating on a scale of 0 to 10. This comprehensive assessment considers various growth aspects, including historical and estimated EPS and revenue growth. NASDAQ:CARG has achieved a 7 out of 10:

• CARG shows a strong growth in Earnings Per Share. In the last year, the EPS has been growing by 37.84%, 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.
• CARG shows quite a strong growth in Revenue. Measured over the last years, the Revenue has been growing by 15.02% yearly.
• CARG is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 33.78% yearly.
• Based on estimates for the next years, CARG will show a quite strong growth in Revenue. The Revenue will grow by 16.05% on average per year.

Understanding NASDAQ:CARG's Valuation

ChartMill assigns a Valuation Rating to each stock, ranging from 0 to 10. This rating is calculated by analyzing different valuation elements, such as price to earnings and free cash flow, both in absolute terms and relative to the market and industry. In the case of NASDAQ:CARG, the assigned 5 reflects its valuation:

• Based on the Price/Earnings ratio, CARG is valued a bit cheaper than the industry average as 65.15% of the companies are valued more expensively.
• Based on the Price/Forward Earnings ratio, CARG is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
• CARG's Price/Forward Earnings ratio indicates a rather cheap valuation when compared to the S&P500 average which is at 94.48.
• The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
• A more expensive valuation may be justified as CARG's earnings are expected to grow with 23.70% in the coming years.

Analyzing Health Metrics

A critical element of ChartMill's stock evaluation is the Health Rating, which spans from 0 to 10. This rating considers multiple health factors, including liquidity and solvency, both in absolute terms and relative to industry peers. NASDAQ:CARG has received a 9 out of 10:

• An Altman-Z score of 10.85 indicates that CARG is not in any danger for bankruptcy at the moment.
• Looking at the Altman-Z score, with a value of 10.85, CARG belongs to the top of the industry, outperforming 87.88% of the companies in the same industry.
• 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 2.95. This indicates that CARG is financially healthy and has no problem in meeting its short term obligations.
• CARG's Current ratio of 2.95 is fine compared to the rest of the industry. CARG outperforms 68.18% of its industry peers.
• CARG has a Quick Ratio of 2.95. This indicates that CARG is financially healthy and has no problem in meeting its short term obligations.
• CARG's Quick ratio of 2.95 is fine compared to the rest of the industry. CARG outperforms 68.18% of its industry peers.

Exploring NASDAQ:CARG's Profitability

Discover ChartMill's exclusive Profitability Rating, a proprietary metric that assesses stocks on a scale of 0 to 10. It takes into consideration various profitability ratios and margins, both in absolute terms and relative to industry peers. Notably, NASDAQ:CARG has achieved a 5:

• CARG has a Return On Invested Capital of 9.72%. This is amongst the best in the industry. CARG outperforms 83.33% of its industry peers.
• The 3 year average ROIC (9.65%) for CARG is below the current ROIC(9.72%), indicating increased profibility in the last year.
• With a decent Operating Margin value of 9.24%, CARG is doing good in the industry, outperforming 74.24% of the companies in the same industry.
• CARG has a Gross Margin of 80.74%. This is in the better half of the industry: CARG outperforms 74.24% of its industry peers.

More Affordable Growth stocks can be found in our Affordable Growth screener.

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

Keep in mind

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.