CarGurus (CARG)
Pretax margin
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Earnings before tax but after interest (EBT) | US$ in thousands | 24,657 | 51,687 | 111,362 | 149,360 | 99,110 |
| Revenue | US$ in thousands | 894,384 | 914,242 | 1,655,040 | 951,373 | 551,451 |
| Pretax margin | 2.76% | 5.65% | 6.73% | 15.70% | 17.97% |
December 31, 2024 calculation
Pretax margin = EBT ÷ Revenue
= $24,657K ÷ $894,384K
= 2.76%
As an analyst, I have examined the pretax margin of CarGurus over the past five years. The pretax margin is a key profitability ratio that indicates the company's efficiency in generating profits before taxes relative to its total revenue.
From the data provided, we observe a gradual decline in CarGurus' pretax margin over the years. Starting at 17.97% on December 31, 2020, the margin decreased to 15.70% on December 31, 2021, showing an initial dip in profitability. This downward trend continued in subsequent years, with pretax margins of 6.73% on December 31, 2022, 5.65% on December 31, 2023, and 2.76% on December 31, 2024.
The declining pretax margin may signify challenges faced by CarGurus in controlling its operating expenses or pricing strategies, which have impacted its profitability. Investors and stakeholders may view this trend as a cause for concern, prompting further analysis into the company's cost structure, revenue streams, and overall financial health.
In conclusion, the decreasing pretax margin of CarGurus highlights a potential issue in its profitability sustainability, warranting closer scrutiny and strategic interventions to reverse this negative trend.
Peer comparison
Dec 31, 2024