CARS
Cars.com Inc.
$9.71
Platform & Compounding FCF
75%
Two-stage FCF DCF
Strong
·
Conviction
Undervalued
Trading 61.6% below fair value
You pay
$9.71
Bear
$25.28
Fair
$25.28
Bull
$27.40
Bear
$25.28
+160.4%
3% stage 1 growth, 12% discount
Fair
$25.28
+160.4%
3% stage 1 growth, 12% discount
Bull
$27.40
+182.2%
4% stage 1 growth, 12% discount
Adjust Assumptions
3.0%
12.0%
3.0%
Key Value Driver
FCF growth rate (3% base case)
Terminal Value % of EV
28%
Implied Market Multiple
6.0x
Market is pricing in (growth)
-6.7%
vs 3.0% base
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (16 analysts)
$11.50
Divergence from AlphaVal
120%
Summary
Using a two-stage FCF DCF with 3% growth decelerating over 15 years, discounted at 12%, the base-case intrinsic value is $25.28 per share.
Warnings
Stock-based employee pay equals 156% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Wall Street's average price target is $11.50 (from 16 analysts). Our estimate is 120% above the consensus -- consider that gap carefully.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions