CarGurus (CARG) versus TrueCar (TRUE) Financial Analysis

CarGurus (NASDAQ: CARG) and TrueCar (NASDAQ:TRUE) are both technology companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, profitability, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Profitability

This table compares CarGurus and TrueCar’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CarGurus N/A N/A N/A
TrueCar -10.29% -10.38% -8.12%

Analyst Ratings

This is a summary of current recommendations for CarGurus and TrueCar, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CarGurus 0 4 1 0 2.20
TrueCar 0 3 5 0 2.63

CarGurus currently has a consensus target price of $29.50, indicating a potential downside of 3.97%. TrueCar has a consensus target price of $17.50, indicating a potential upside of 43.68%. Given TrueCar’s stronger consensus rating and higher possible upside, analysts plainly believe TrueCar is more favorable than CarGurus.

Institutional & Insider Ownership

92.2% of TrueCar shares are owned by institutional investors. 15.5% of TrueCar shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares CarGurus and TrueCar’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CarGurus N/A N/A N/A ($0.21) -146.29
TrueCar $277.51 million 4.39 -$41.70 million ($0.35) -34.80

CarGurus has higher earnings, but lower revenue than TrueCar. CarGurus is trading at a lower price-to-earnings ratio than TrueCar, indicating that it is currently the more affordable of the two stocks.

Summary

TrueCar beats CarGurus on 7 of the 11 factors compared between the two stocks.

CarGurus Company Profile

CarGurus, Inc. is an online automotive marketplace connecting buyers and sellers of new and used cars. Using proprietary technology, search algorithms, and data analytics. The Company’s marketplace empowers users with unbiased third-party validation on pricing and dealer reputation as well as other information that aids them in finding Great Deals from Great Dealers. In addition to the United States, the Company operates online marketplaces in Canada, the United Kingdom, and Germany. The Company’s products include Consumer Marketplace, Dealer Marketplace, Dealer Dashboard, Dealer Advertising and Customer Acquisition Products, Auto Manufacturer and Other Advertiser Products.

TrueCar Company Profile

TrueCar, Inc. is an Internet-based information, technology, and communication services company. The Company has a data-driven online platform, which features market data and analytics. The Company-branded platform is available on its TrueCar Website and mobile applications. It customizes and operates its platform on a co-branded basis for its affinity group marketing partners, including financial institutions, membership-based organizations, and employee buying programs for a range of enterprises. The Company enables users to obtain market-based pricing data on new and used cars, and to connect with its network of TrueCar Certified Dealers. Its network of over 13,000 TrueCar Certified Dealers consists primarily of new car franchises, as well as independent dealers selling used vehicles. Its subsidiary, ALG, Inc., provides forecasts and consulting services regarding determination of the residual value of an automobile at given future points in time.

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