As of September 10, 2025, Cars.com Inc's estimated intrinsic value ranges from $9.24 to $44.36 per share, depending on the valuation methodology applied.
| Valuation Method | Fair Value (USD) | Implied Upside/Downside |
|---|---|---|
| Discounted Cash Flow (10Y) | $21.84 | +63.1% |
| Discounted Cash Flow (5Y) | $18.05 | +34.8% |
| Dividend Discount Model (Multi-Stage) | $9.24 | -31.0% |
| Dividend Discount Model (Stable) | $9.48 | -29.2% |
| Earnings Power Value | $44.36 | +231.3% |
Is Cars.com Inc (CARS) undervalued or overvalued?
With the current market price at $13.39, the stock appears to be significantly undervalued.
Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate Cars.com Inc's intrinsic value, including:
The cost of capital is a critical factor in valuation models, representing the required return for investors.
| WACC Component | Low | High |
|---|---|---|
| Long-term bond rate | 3.9% | 4.4% |
| Equity market risk premium | 4.6% | 5.6% |
| Adjusted beta | 0.77 | 0.86 |
| Cost of equity | 7.4% | 9.7% |
| Cost of debt | 5.0% | 5.0% |
| Tax rate | 19.6% | 22.8% |
| Debt/Equity ratio | 0.55 | 0.55 |
| After-tax WACC | 6.2% | 7.6% |
Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:
| DCF Model | Fair Value | Enterprise Value | % from Terminal Value |
|---|---|---|---|
| 5-Year Growth | $18 | $1,537M | 80.2% |
| 10-Year Growth | $22 | $1,770M | 65.4% |
| 5-Year EBITDA | $6 | $788M | 61.4% |
| 10-Year EBITDA | $11 | $1,081M | 43.3% |
The DDM values a company based on its expected future dividend payments. We used two approaches:
EPV assesses a company's value based on its current normalized earnings power, assuming no growth.
| EPV Component | Value |
|---|---|
| Normalized Earnings | $216M |
| Discount Rate (WACC) | 7.6% - 6.2% |
| Enterprise Value | $2,836M - $3,472M |
| Net Debt | $428M |
| Equity Value | $2,407M - $3,044M |
| Outstanding Shares | 61M |
| Fair Value | $39 - $50 |
| Selected Fair Value | $44.36 |
| Metric | Value |
|---|---|
| Market Capitalization | $823M |
| Enterprise Value | $1251M |
| Trailing P/E | 20.06 |
| Forward P/E | 17.14 |
| Trailing EV/EBITDA | 5.75 |
| Current Dividend Yield | 0.00% |
| Dividend Growth Rate (5Y) | 0.00% |
| Debt-to-Equity Ratio | 0.55 |
To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:
| Valuation Method | Weight | Weighted Value |
|---|---|---|
| Discounted Cash Flow (10Y) | 30% | $6.55 |
| Discounted Cash Flow (5Y) | 25% | $4.51 |
| Dividend Discount Model (Multi-Stage) | 20% | $1.85 |
| Dividend Discount Model (Stable) | 15% | $1.42 |
| Earnings Power Value | 10% | $4.44 |
| Weighted Average | 100% | $18.77 |
Based on our comprehensive valuation analysis, Cars.com Inc's intrinsic value is $18.77, which is approximately 40.2% above the current market price of $13.39.
Key investment considerations:
Given these factors, we believe Cars.com Inc is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.