For those who appreciate growth without the sticker shock, CARGURUS INC (NASDAQ:CARG) is worth considering.

Here's CARGURUS INC (NASDAQ:CARG) for you, a growth stock our stock screener believes is undervalued. NASDAQ:CARG is scoring impressively in terms of growth while demonstrating strong financials. On top of that, it remains attractively priced. Let's break it down further.

Deciphering NASDAQ:CARG's Growth Rating

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NASDAQ:CARG boasts a 7 out of 10:

• The Earnings Per Share has grown by an impressive 39.52% over the past year.
• Measured over the past years, CARG shows a very strong growth in Earnings Per Share. The EPS has been growing by 26.69% on average per year.
• Measured over the past years, CARG shows a quite strong growth in Revenue. The Revenue has been growing by 8.72% on average per year.
• CARG is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 30.01% yearly.
• The Revenue is expected to grow by 19.74% on average over the next years. This is quite good.
• When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

Deciphering NASDAQ:CARG's Valuation Rating

ChartMill employs its own Valuation Rating system for all stocks. This score, ranging from 0 to 10, is determined by evaluating different valuation factors, including price to earnings and free cash flow, both in absolute terms and relative to the market and industry. NASDAQ:CARG has earned a 5 for valuation:

• CARG's Price/Earnings ratio is a bit cheaper when compared to the industry. CARG is cheaper than 71.83% of the companies in the same industry.
• Compared to an average S&P500 Price/Earnings ratio of 29.16, CARG is valued a bit cheaper.
• CARG's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. CARG is cheaper than 70.42% of the companies in the same industry.
• CARG is valuated rather cheaply when we compare the Price/Forward Earnings ratio to 21.95, which is the current average of the S&P500 Index.
• CARG's Enterprise Value to EBITDA ratio is a bit cheaper when compared to the industry. CARG is cheaper than 70.42% of the companies in the same industry.
• 67.61% of the companies in the same industry are more expensive than CARG, based on the Price/Free Cash Flow ratio.
• The decent profitability rating of CARG may justify a higher PE ratio.
• A more expensive valuation may be justified as CARG's earnings are expected to grow with 24.38% in the coming years.

Deciphering NASDAQ:CARG's Health Rating

ChartMill assigns a proprietary Health Rating to each stock. The score is computed by evaluating various liquidity and solvency ratios and ranges from 0 to 10. NASDAQ:CARG was assigned a score of 10 for health:

• An Altman-Z score of 9.62 indicates that CARG is not in any danger for bankruptcy at the moment.
• CARG's Altman-Z score of 9.62 is amongst the best of the industry. CARG outperforms 88.73% 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.
• A Current Ratio of 4.20 indicates that CARG has no problem at all paying its short term obligations.
• The Current ratio of CARG (4.20) is better than 84.51% of its industry peers.
• CARG has a Quick Ratio of 4.20. This indicates that CARG is financially healthy and has no problem in meeting its short term obligations.
• The Quick ratio of CARG (4.20) is better than 84.51% of its industry peers.

Looking at the Profitability

ChartMill assigns a Profitability Rating to every stock. This score ranges from 0 to 10 and evaluates the different profitability ratios and margins, both absolutely, but also relative to the industry peers. NASDAQ:CARG scores a 7 out of 10:

• Looking at the Return On Assets, with a value of 2.54%, CARG is in the better half of the industry, outperforming 70.42% of the companies in the same industry.
• With a decent Return On Equity value of 3.87%, CARG is doing good in the industry, outperforming 73.24% of the companies in the same industry.
• Looking at the Return On Invested Capital, with a value of 13.76%, CARG belongs to the top of the industry, outperforming 87.32% of the companies in the same industry.
• The last Return On Invested Capital (13.76%) for CARG is above the 3 year average (7.96%), which is a sign of increasing profitability.
• Looking at the Profit Margin, with a value of 2.34%, CARG is in the better half of the industry, outperforming 67.61% of the companies in the same industry.
• The Operating Margin of CARG (17.63%) is better than 87.32% of its industry peers.
• In the last couple of years the Operating Margin of CARG has grown nicely.
• CARG's Gross Margin of 83.71% is amongst the best of the industry. CARG outperforms 80.28% of its industry peers.

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

Our latest full fundamental report of CARG contains the most current fundamental analsysis.

Keep in mind

Important Note: The content of this article is not intended as trading advice. It is essential to perform your own analysis and exercise caution when making trading decisions. The article presents observations created by automated analysis but does not guarantee any trading or investment outcomes. Always trade responsibly and make independent judgments.