Cars.com Inc (CARS)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 37.27% | 37.94% | 34.38% | -147.56% | -50.99% |
| Operating profit margin | 8.21% | 10.68% | 8.26% | -174.11% | -77.45% |
| Pretax margin | 2.75% | 3.65% | 1.62% | -183.74% | -82.53% |
| Net profit margin | 17.98% | 2.78% | 1.84% | -154.83% | -77.33% |
The profitability ratios of Cars.com over the past five years show varying levels of performance. The gross profit margin has remained relatively stable, ranging from 81.45% to 83.59%, indicating consistent efficiency in generating revenue after accounting for the cost of goods sold.
The operating profit margin has shown some fluctuation, with a peak of 10.10% in 2022 and a low of 2.54% in 2019. This metric reflects the company's ability to control its operating expenses and generate profits from its core business activities.
The pretax margin has also been volatile, with significant negative margins in 2020 and 2019, implying challenges in generating profits before accounting for taxes. However, there has been an improvement in recent years, with positive margins in 2021, 2022, and 2023, indicating better operational efficiency.
The net profit margin, which represents the profitability after all expenses, including taxes, has shown significant fluctuations, including negative margins in 2020 and 2019. However, there has been a notable improvement in the most recent years, with positive and improving margins in 2021, 2022, and 2023, reaching a peak of 17.19%.
Overall, Cars.com has demonstrated an ability to maintain a strong gross profit margin and improve its operating efficiency and profitability in recent years, as evidenced by the increasing trends in the operating profit margin, pretax margin, and net profit margin.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 4.62% | 6.44% | 4.80% | -82.49% | -22.00% |
| Return on assets (ROA) | 10.10% | 1.68% | 1.07% | -73.36% | -21.96% |
| Return on total capital | 5.68% | 7.84% | 5.65% | -93.96% | -25.46% |
| Return on equity (ROE) | 24.07% | 4.48% | 2.71% | -214.32% | -39.03% |
Cars.com's profitability ratios have shown a mixed performance over the past five years. Operating return on assets (Operating ROA) has fluctuated, with a peak of 6.44% in 2022 and a low of 0.76% in 2019. This ratio measures the company's ability to generate operating income from its assets, indicating a decline in efficiency in recent years.
Return on assets (ROA) has improved significantly from negative figures in 2020 and 2019 to a positive 10.10% in 2023. This ratio reflects overall profitability relative to the total assets deployed, showing a positive turnaround in the company's ability to generate earnings from its assets.
Return on total capital has followed a similar pattern to Operating ROA and ROA, with fluctuations but a generally improving trend over the years. The ratio increased to 5.55% in 2023, indicating a satisfactory return on the total capital invested in the business.
Return on equity (ROE) has experienced notable variability, with substantial negative figures in 2020 and 2019. However, Cars.com achieved a significant improvement in ROE to 24.07% in 2023, demonstrating a strong return to shareholders' equity during the period.
In conclusion, Cars.com has shown improvements in overall profitability ratios, with a notable recovery in ROA and ROE, signaling enhanced efficiency and profitability in recent years. However, fluctuations in Operating ROA and Return on total capital indicate a need for continuous monitoring and strategic management of asset utilization and capital efficiency.