It's been a good week for Cars.com Inc. (NYSE:CARS) shareholders, because the company has just released its latest first-quarter results, and the shares gained 3.0% to US$17.60. It looks like a pretty bad result, all things considered. Although revenues of US$180m were in line with analyst predictions, statutory earnings fell badly short, missing estimates by 88% to hit US$0.01 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Cars.com

Taking into account the latest results, the current consensus from Cars.com's seven analysts is for revenues of US$737.1m in 2024. This would reflect a satisfactory 5.0% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to plunge 72% to US$0.45 in the same period. Before this earnings report, the analysts had been forecasting revenues of US$736.7m and earnings per share (EPS) of US$0.48 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$23.50, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Cars.com analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$18.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Cars.com's rate of growth is expected to accelerate meaningfully, with the forecast 6.7% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 2.9% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Cars.com is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Cars.com. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Cars.com going out to 2026, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 3 warning signs for Cars.com you should be aware of, and 1 of them makes us a bit uncomfortable.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.