Cars.com Stock Drops Despite Strong Profits and Growth

Cars.com's stock is down 22% in the past 3 months despite its strong financials, such as a high 24% return on equity (ROE).

ROE measures how efficiently a company generates profits from shareholders' equity. Cars.com's ROE is higher than the industry average of 7.9%.

Cars.com's earnings have grown at a moderate 17% over the past 5 years, compared to 5.3% for the industry average. High ROE and profit retention allow for earnings growth.

Cars.com does not pay dividends, so all profits are reinvested into the business, fueling earnings growth.

However, analyst forecasts predict Cars.com's earnings will shrink in the future, so investors should assess if this outlook is already priced into the stock.