Updates based on data, report, and new findings
– Car prices are declining, which is bad news for traditional car dealers but good news for other specialized services.
– Online sales platform companies are attracting attention from Wall Street analysts and the broader market.
– June 2023 saw the most significant price contraction in the car market since April 2020.
– Rising interest rates will affect demand trends in the car market.
– Cars.com and CarGurus have been undervalued despite strong earnings performance.
– Wall Street analysts have set target prices for Cars.com and CarGurus that imply attractive upside potential.
– The traditional dealership model with physical inventory is being disfavored by the market.
– Markets are willing to pay a “premium” for online dealer platforms compared to traditional dealerships.
– Analysts expect EPS declines for AutoNation and Penske Automotive Group, while growth is expected in online car sales platforms.
Data and Report
– Car prices are declining after being a significant driver of inflation from 2020 to 2022.
– Cox Automotive’s Manheim index shows the most significant price contraction in June 2023 since April 2020.
– Rising interest rates are impacting the average monthly car payment, which has increased to $733.
– Cars.com reported EPS of $1.37 for the second quarter of 2023, beating expectations.
– CarGurus beat earnings expectations and has strong potential, according to analysts.
– The auto dealership industry has an average forward P/E of 13.4x, while Cars.com and CarGurus trade at higher multiples.
– Traditional dealerships like AutoNation and Penske Automotive Group have lower forward P/E ratios compared to online dealer platforms.
New Findings
– Markets are favoring online dealer platforms over traditional dealerships due to declining car prices and changing market dynamics.
– Wall Street analysts have set target prices that imply upside potential for Cars.com and CarGurus.
– Car prices are expected to keep falling, affecting the inventory values and sales margins of traditional dealerships.
– Analysts expect EPS declines for AutoNation and Penske Automotive Group, indicating a shift in growth towards online car sales platforms.
