CarGurus (CARG)
Profitability ratios
Return on sales
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Gross profit margin | 82.62% | 71.26% | 39.73% | 69.10% | 92.26% |
| Operating profit margin | 1.50% | 3.57% | 6.55% | 15.58% | 17.73% |
| Pretax margin | 2.76% | 5.65% | 6.73% | 15.70% | 17.97% |
| Net profit margin | 2.34% | 3.40% | 5.10% | 11.48% | 14.06% |
CarGurus has experienced fluctuations in its profitability ratios over the years. The gross profit margin decreased from 92.26% in 2020 to 39.73% in 2022 before increasing to 82.62% in 2024. This suggests variations in the company's ability to generate revenue after accounting for the cost of goods sold.
Similarly, the operating profit margin declined from 17.73% in 2020 to 1.50% in 2024, indicating a decrease in operational efficiency and profitability. The pretax margin followed a similar trend, decreasing from 17.97% in 2020 to 2.76% in 2024, reflecting challenges in maintaining profitability before accounting for taxes.
The net profit margin also showed a downward trajectory, dropping from 14.06% in 2020 to 2.34% in 2024, suggesting declining profitability after considering all expenses. Overall, CarGurus has faced challenges in sustaining profitability, which may require strategic adjustments to improve operational efficiency and financial performance in the future.
Return on investment
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 1.63% | 3.55% | 11.70% | 15.92% | 19.46% |
| Return on assets (ROA) | 2.54% | 3.38% | 9.10% | 11.73% | 15.44% |
| Return on total capital | 27.31% | 5.29% | 15.16% | 28.90% | 22.09% |
| Return on equity (ROE) | 3.87% | 5.04% | 11.49% | 21.14% | 20.76% |
Based on the provided data, CarGurus' profitability ratios exhibit a general decreasing trend over the five-year period from 2020 to 2024.
1. Operating return on assets (Operating ROA) declined from 19.46% in 2020 to 1.63% in 2024. This indicates the percentage of operating income generated relative to the total assets employed by the company for its core operations. The decreasing trend suggests potential inefficiencies in utilizing assets to generate operating profits.
2. Return on assets (ROA) also decreased from 15.44% in 2020 to 2.54% in 2024. ROA is a measure of net income generated relative to the total assets owned by the company. The decline in ROA signifies a diminishing ability to generate profits using its total asset base.
3. Return on total capital fluctuated across the years, starting at 22.09% in 2020, increasing significantly to 28.90% in 2021, but then decreasing to 27.31% in 2024. This metric reflects the company’s efficiency in generating returns from both debt and equity investments. The inconsistency in this ratio could indicate varying levels of capital utilization efficiency over the years.
4. Return on equity (ROE) also saw a downward trajectory from 20.76% in 2020 to 3.87% in 2024. ROE measures the return generated for the shareholders based on their equity investment. The decreasing ROE suggests a declining profitability trend specifically in relation to the equity investments made by shareholders.
In summary, the decreasing trend in these profitability ratios indicates potential challenges for CarGurus in maintaining or improving its profitability levels and efficiency in generating returns for its stakeholders over the years analyzed.