CARG

The story here is the August 2025 decision to wind down CarOffer, completed and 'abandoned for accounting purposes as of December 31, 2025.' That transaction business — which inflated FY2022 revenue to $1.66B then collapsed it to $698M in FY2023 — was, in management's words, 'less effective in today's more volatile and unpredictable pricing environment.' Stripping it out leaves the high-margin core: a No. 1-trafficked U.S. auto marketplace plus data/intelligence software for dealers. The continuing-operations numbers are genuinely excellent — 92.8% gross margin, 27.0% operating margin, 41.7% ROE, zero long-term debt, and $295M of operating cash flow against just $6.4M of capex, i.e. ~$289M free cash flow (~8.6% FCF yield on the $3.36B cap). FY2025 revenue grew 13.7% to $907M, a clean double-digit pace once the CarOffer noise is removed.

The headline +643% net-income jump to $156M is real but flattered by the absence of CarOffer's drag (the wind-down itself cost only $13.3M), so I treat $1.55 diluted EPS as the new, cleaner run-rate rather than a growth rate to extrapolate. Even so, 21.9x earnings and 3.7x sales are undemanding for a debt-free, asset-light compounder returning capital hard: management repurchased $352M of stock in FY2025 (up 140.8%), shrinking the share count 5.5% — buybacks larger than net income, funded comfortably by FCF. The shrinking cash ($191M, -37.4%), equity (-30.9%) and total assets (-19.7%) are not balance-sheet stress; they are the arithmetic of aggressive buybacks plus the CarOffer exit, and liabilities/equity sits at a conservative 0.77x.