Cars.com Inc (CARS)

Return on equity (ROE)

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	US$ in thousands	118,442	17,206	10,791	-789,106	-445,324
Total stockholders’ equity	US$ in thousands	492,108	384,430	398,020	368,190	1,141,070
ROE		24.07%	4.48%	2.71%	-214.32%	-39.03%

December 31, 2023 calculation

ROE = Net income ÷ Total stockholders’ equity
= $118,442K ÷ $492,108K
= 24.07%

Cars.com's return on equity (ROE) has shown significant fluctuations over the past five years. In 2023, the ROE improved substantially to 24.07%, indicating that the company generated a strong return for its shareholders relative to its equity base. This signifies efficient utilization of shareholder funds to generate profits.

The substantial increase in ROE from 2022 to 2023 reflects improved profitability and efficiency in managing the company's assets and liabilities. This positive trend suggests that Cars.com has made effective strategic decisions and operational improvements to enhance its financial performance.

However, it is important to note that in 2020 and 2019, the ROE was negative, indicating that the company incurred losses that exceeded the equity base during those years. The drastic negative ROE in 2020 (-240.21%) is particularly concerning and may point to significant financial challenges or one-time events affecting the company's profitability during that period.

Overall, while the recent increase in ROE is a positive sign for Cars.com, analysts should continue to monitor the company's performance closely to assess its ability to sustain and further improve its return on equity in the future.