Is Cars.com, Inc. overvalued or undervalued?

As of 23 May 2025, the valuation grade for Cars.com, Inc. has moved from very expensive to expensive, indicating a slight improvement in its valuation outlook. The company is currently considered overvalued. Key ratios include a P/E ratio of 31, an EV to EBITDA of 6.99, and a Price to Book Value of 1.33. In comparison, Perion Network Ltd., which is considered risky, has a significantly higher P/E ratio of 193.37, highlighting the relative valuation concerns for Cars.com.
Despite the recent stock performance showing a 10.22% return over the past week compared to a slight decline in the S&P 500, the year-to-date performance reveals a substantial drop of 33.41%, further supporting the overvaluation thesis. With a ROCE of 5.17% and ROE of 4.30%, Cars.com is struggling to generate returns that justify its current price levels, reinforcing the conclusion that it is overvalued in the current market context.