Value
7.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.6 |
| P/S | 8.3 |
| EV/EBITDA | 5.4 |
| Fwd P/E | 9.2 |
| PEG | 7.3 |
| Analyst target | 5.0 |
- ▸Forward P/E: 10.7x
- ▸PEG: 0.95
- ▸Attractively valued
CARG · Why this verdict
Why CarGurus (CARG) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
CarGurus is a high-quality franchise trading at a meaningful discount — forward P/E below 10 times with a PEG under 1 and 147% free cash flow conversion — but a confirmed technical downtrend and heavy short interest make near-term entry unattractive; the setup favors patience until price momentum stabilizes.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company beat consensus estimates most recently in May 2026, and three of the last four quarters were beats with an average positive surprise of approximately 2.4%, suggesting consistent delivery against expectations. Earnings | The next two earnings releases (August 2026 and beyond) both beat consensus estimates, keeping the average positive surprise above 2%. | →Stable |
| CounterThe one in-line quarter in the recent four-quarter window — February 2026 — shows guidance discipline is not perfect; if guidance is reset higher after a strong result, the beat streak could stall. | ||
The business earns 58% return on equity, converts 147% of net income into free cash flow, and carries a wide economic moat with a Piotroski F-Score of 8 out of 9 — yet trades at a forward P/E of 9.6 times and a PEG of 0.85, a material discount for a franchise of this caliber. Quality breakdown | Free cash flow conversion remains above 120% of net income and the forward multiple expands toward 13 times over the next 12 months as the market re-rates the quality of earnings. | →Stable |
| CounterWeak revenue and earnings growth scores suggest the quality metrics may be backward-looking; if growth continues to disappoint, the discount may persist or deepen rather than close. | ||
The stock trades below its 200-day moving average with that average declining at -1.0% over the past 30 days — a confirmed technical downtrend that elevates near-term entry risk and has triggered a hard block on new positioning. Warnings | If this pillar's concern resolves, the stock should recross above its 200-day moving average and that average's 30-day slope should turn positive — falsifying the downtrend thesis. | →Stable |
| CounterMACD is improving and RSI stands at 51 — both momentum indicators are recovering — which suggests the downtrend may be in its late stages rather than accelerating; the setup is described as a potential recovery in progress. | ||
With 18% of the float sold short against improving MACD momentum and 16.4% headroom to the price target, any positive catalyst could trigger forced covering that amplifies gains meaningfully above what the underlying fundamental re-rating alone would produce. Risk breakdown | Short interest falls below 10% within two quarters while price appreciation of at least 10% accompanies the covering, confirming the squeeze dynamic rather than passive unwind. | →Stable |
| CounterElevated short interest at 18% also reflects informed bearish conviction about growth; if the company fails to demonstrate revenue acceleration, shorts may add rather than cover, and the high implied volatility of 105% makes options-based protection expensive. | ||
The company beat consensus estimates most recently in May 2026, and three of the last four quarters were beats with an average positive surprise of approximately 2.4%, suggesting consistent delivery against expectations.
→StableEarnings
- Expectation
- The next two earnings releases (August 2026 and beyond) both beat consensus estimates, keeping the average positive surprise above 2%.
CounterThe one in-line quarter in the recent four-quarter window — February 2026 — shows guidance discipline is not perfect; if guidance is reset higher after a strong result, the beat streak could stall.
The business earns 58% return on equity, converts 147% of net income into free cash flow, and carries a wide economic moat with a Piotroski F-Score of 8 out of 9 — yet trades at a forward P/E of 9.6 times and a PEG of 0.85, a material discount for a franchise of this caliber.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 120% of net income and the forward multiple expands toward 13 times over the next 12 months as the market re-rates the quality of earnings.
CounterWeak revenue and earnings growth scores suggest the quality metrics may be backward-looking; if growth continues to disappoint, the discount may persist or deepen rather than close.
The stock trades below its 200-day moving average with that average declining at -1.0% over the past 30 days — a confirmed technical downtrend that elevates near-term entry risk and has triggered a hard block on new positioning.
→StableWarnings
- Expectation
- If this pillar's concern resolves, the stock should recross above its 200-day moving average and that average's 30-day slope should turn positive — falsifying the downtrend thesis.
CounterMACD is improving and RSI stands at 51 — both momentum indicators are recovering — which suggests the downtrend may be in its late stages rather than accelerating; the setup is described as a potential recovery in progress.
With 18% of the float sold short against improving MACD momentum and 16.4% headroom to the price target, any positive catalyst could trigger forced covering that amplifies gains meaningfully above what the underlying fundamental re-rating alone would produce.
→StableRisk breakdown
- Expectation
- Short interest falls below 10% within two quarters while price appreciation of at least 10% accompanies the covering, confirming the squeeze dynamic rather than passive unwind.
CounterElevated short interest at 18% also reflects informed bearish conviction about growth; if the company fails to demonstrate revenue acceleration, shorts may add rather than cover, and the high implied volatility of 105% makes options-based protection expensive.
Per-dimension breakdown
Quality
8.6/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 10.0 |
| Gross margin | 10.0 |
| Op margin | 9.8 |
| Net margin | 7.9 |
| Current ratio | 6.0 |
| FCF quality | 9.9 |
| Moat | 8.2 |
| Rule of 40 | 5.5 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 58%
- ▸Strong margins: 16%
- ▸Excellent cash conversion: 147% FCF/NI
- ▸Wide economic moat
Growth
3.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.2 |
| EPS growth | 0.3 |
Momentum
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.5 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 4.0 |
| Volume | 0.0 |
- ▸Overbought bear rally (RSI 78)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.8%/30d — confirmed downtrend
Sentiment
6.6/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 7.7 |
| erm sentiment | 4.5 |
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $669,449 (0.024% of mkt cap)
Peer rank
6.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.0 |
| quality rank | 9.1 |
| growth rank | 7.5 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.0 |
| support resistance | 1.1 |
| 52w position | 5.8 |
Risk (lower is worse)
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.8 |
| days to cover | 6.0 |
| volatility | 2.9 |
| put call | 4.0 |
| implied vol | 3.6 |
| max pain risk | 3.0 |
| beta | 6.2 |
| debt equity | 6.2 |
- ▸Short squeeze setup: 18% short, quality 7.5
- ▸Above max pain $20
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 3.7 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (8)
- MOMENTUM:5.3>=4.5
- INSIDER:OK
- DEATH_CROSS:QUALITY_MOMENTUM_EXEMPT
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:42d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:0.3<1.5@spot
Warning (2)
- MOMENTUM:5.3<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:quality=8.6>=7.5+momentum=5.3>=5.0 exempted
Reward-to-Risk
0.31
Upside
+4.3%
Downside
14.1%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 78
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $2.8B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: MOMENTUM:5.3>=4.5. Top dim: Quality at 8.6; weakest: Technical at 2.6. No conviction either direction.
The strongest dimensions are Quality at 8.6, Value at 7.1, and Sentiment at 6.6; the weakest are Technical at 2.6, Growth at 3.2, and Insider at 3.9. The V9 engine flagged 1 failed gate with 2 warnings, producing an asymmetric reward-to-risk of 0.31 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1The business earns 58% return on equity, converts 147% of net income into free cash flow, and carries a wide economic moat with a Piotroski F-Score of 8 out of 9 — yet trades at a forward P/E of 9.6 times and a PEG of 0.85, a material discount for a franchise of this caliber.
Trip ifFree cash flow conversion falls below 80% of net income for 2 consecutive quarters.
- P2The company beat consensus estimates most recently in May 2026, and three of the last four quarters were beats with an average positive surprise of approximately 2.4%, suggesting consistent delivery against expectations.
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P3The stock trades below its 200-day moving average with that average declining at -1.0% over the past 30 days — a confirmed technical downtrend that elevates near-term entry risk and has triggered a hard block on new positioning.
Trip ifPrice recrosses above the 200-day moving average and the 30-day slope of that average turns positive for 4 consecutive weeks.
- P4With 18% of the float sold short against improving MACD momentum and 16.4% headroom to the price target, any positive catalyst could trigger forced covering that amplifies gains meaningfully above what the underlying fundamental re-rating alone would produce.
Trip ifShort interest falls below 8% without price reaching $32.52 within the same quarter.