Bear Of The Day: Cars.com

Cars.com (CARS) is a Zacks Rank #5 (Strong Sell) and that makes it elegible for the Bear of the Day article. I felt it was good one to run against the Tesla (TSLA) Bull of the Day article which you can read here: https://www.zacks.com/commentary/166108/bull-of-the-day:-tesla-(tsla)-)

So why is Cars.com a Zacks Rank #5 (Strong Sell)? The quick and easy answer is that earnings estimates have been falling. The Zacks Consensus Estimate has dropped from $2.61 to $2.14 over the last 30 days. The Zacks Consensus Estimate for 2019 has also slipped. It moved from $2.94 to $2.45 over the same time period.

Earnings Miss

I see that Cars.com missed the mark in a big way in the most recent earnings release. The company reported $0.39 but the Zacks Consensus Estimate was looking for $0.64. That is a miss of $0.25 or just a little over 39% under expectations.

Following the miss, analysts took estimates down for this year and next year as well.

Recent M&A Rumor

On May 31 there was an article in the NY Post that said the company hired JPMorgan to help sell the company. This may or may not be true, but the simple fact is once a rumor like this hits the press it isn't going away until the company comes out and says that it is not for sale.

There are several other names in the auto space that are just as interesting as Cars.com.

CVNA Zacks Rank #3 (Hold)

CARG Zacks Rank #3 (Hold)

TRUE Zacks Rank #3 (Hold)

CVNA has a different business model than the advertising model that is emploiyed by several of the stocks in this space.

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