CarGurus (CARG)
Return on equity (ROE)
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Net income | US$ in thousands | 36,942 | 84,387 | 109,244 | 77,553 | 42,146 |
| Total stockholders’ equity | US$ in thousands | 616,852 | 734,609 | 516,841 | 373,586 | 256,855 |
| ROE | 5.99% | 11.49% | 21.14% | 20.76% | 16.41% |
December 31, 2023 calculation
ROE = Net income ÷ Total stockholders’ equity
= $36,942K ÷ $616,852K
= 5.99%
Return on equity (ROE) is a key financial metric that measures a company's efficiency in generating profits from its shareholders' equity. Looking at CarGurus Inc's ROE performance over the past five years, we observe fluctuating results.
In 2023, CarGurus Inc's ROE stood at 5.04%, indicating a decrease from the previous year. This suggests that the company was less efficient in utilizing shareholder equity to generate profits compared to the prior year. The decrease in ROE could be attributed to various factors such as increased expenses, lower revenue growth, or changes in the capital structure.
In contrast, CarGurus Inc achieved a significantly higher ROE of 26.38% in 2022, reflecting a strong performance in that year. This indicates that the company was successful in generating a higher return for its shareholders relative to the equity they invested. The substantial rise in ROE from the negative figure in 2021 to 26.38% in 2022 suggests a significant improvement in the company's profitability and efficiency.
The negative ROE of -0.03% in 2021 indicates that CarGurus Inc was not able to generate profits from the shareholders' equity, signifying a poor performance in that particular year. This could be a cause for concern as it implies that the company incurred losses that exceeded the equity invested by shareholders.
In 2020 and 2019, CarGurus Inc achieved ROE figures of 20.76% and 16.41%, respectively. These results show the company's ability to generate profits efficiently relative to the equity provided by shareholders. However, the ROE in 2020 was lower than that in 2019, indicating a slight decrease in profitability efficiency.
Overall, CarGurus Inc's ROE performance has been volatile over the past five years, with fluctuations from negative returns to substantial gains. It is essential for investors and stakeholders to closely monitor the company's ROE trends to assess its financial health and efficiency in utilizing shareholder equity.
Peer comparison
Dec 31, 2023