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CarGurus Probability of Financial Distress (%)

: 0.01% (As of Today)
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Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, CarGurus's Probability of Financial Distress (%) is 0.01%.

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


Competitive Comparison

For the Internet Content & Information subindustry, CarGurus's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.

   

CarGurus Probability of Financial Distress (%) Distribution

For the Interactive Media industry and Communication Services sector, CarGurus's Probability of Financial Distress (%) distribution charts can be found below:

* The bar in red indicates where CarGurus's Probability of Financial Distress (%) falls into.



CarGurus Probability of Financial Distress (%) Calculation

Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.

The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:

LPFD= -20.12 * NIMTAAVG + 1.60 * TLMTA - 7.88 * EXRETAVG + 1.55 * SIGMA - 0.005 * RSIZE - 2.27 * CASHMTA + 0.070 * MB - 0.09 * PRICE -8.87
=-9.24

The Probability of Financial Distress (%) (PFD) was then obtianed by:

PFD=1/(1 + e^(-LPFD))*100%
=0.01%

The eight explanatory variables are:

1. NIMTAAVG = Net Income to Market Total Assets

NIMTAAVG=Net Income / Market Total Assets
=Net Income / (Market Cap + Total Liabilities)

*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.

2. TLMTA = Total liabilities to Market Total Assets

TLMTA=Total Liabilities / Market Total Assets

3. CASHMTA = Cash to Market Total Assets

For non-financial companies, CASHMTA is measured as:

CASHMTA=Cash, Cash Equivalents, Marketable Securities / Market Total Assets

4. EXRETAVG = Excess Return compared to the S&P 500

EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.

5. SIGMA = Standard Deviation of Daily Returns

For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).

6. RSIZE = Relative Size

RSIZE=log (Market Cap / Total Market Cap of S&P 500 companies)

7. MB = Market to Adjusted Book Equity Ratio


8. PRICE

PRICE is measured as the log of the stock price, capped at log(15).


CarGurus  (NAS:CARG) Probability of Financial Distress (%) Explanation

Like the Altman Z-Score, the PFD measures a company's bankruptcy risk in the upcoming year. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.


CarGurus Probability of Financial Distress (%) Related Terms

Thank you for viewing the detailed overview of CarGurus's Probability of Financial Distress (%) provided by GuruFocus.com. Please click on the following links to see related term pages.


CarGurus Business Description

CarGurus logo
Industry
Traded in Other Exchanges
Address
2 Canal Park, 4th Floor, Cambridge, MA, USA, 02141
CarGurus Inc is a company that acts as an online automotive marketplace connecting buyers and sellers of new and used cars. The company provides three types of marketplace Listing products, Restricted Listings, and Enhanced or Featured Listing through which it offers real-time and historical data analyzing the connections and pricing analysis. It also provides all dealers with a web widget to place Deal Rating Badges, which show deal rating. The listing platforms offer auto manufacturers and others to buy advertising on the company's site and target consumers based on the make, model, and zip code of the cars. The company operates through two geographical segments namely United States and International. Most of the company's revenue comes from the United States.
Executives
Steinert Langley director, 10 percent owner, officer: CEO and Chairman C/O CARGURUS, INC. 2 CANAL PARK, 4TH FLOOR CAMBRIDGE MA 02141
Caputo Thomas Michael officer: Chief Product Officer C/O CARGURUS, INC. 2 CANAL PARK, 4TH FL. CAMBRIDGE MA 02141
Eldridge Andrea Lee officer: Chief People Officer 50 PEMBERTON STREET CAMBRIDGE MA 02140
Patton Kathleen Bender officer: General Counsel and Secretary 2 CANAL PARK 4TH FLOOR CAMBRIDGE MA 02141
Welch Sarah Amory officer: Chief Marketing Officer C/O CARGURUS, INC. 2 CANAL PARK, 4TH FL. CAMBRIDGE MA 02141
Zales Samuel officer: COO and President C/O CARGURUS, INC. 2 CANAL PARK, 4TH FL. CAMBRIDGE MA 02141
Lomeli Kyle officer: Chief Technology Officer 120 SYCAMORE STREET BELMONT MA 02478
Schwartz Greg M director C/O ZILLOW GROUP, INC. 1301 SECOND AVENUE, FLOOR 31 SEATTLE WA 98101
Smith Ian G director C/O CARGURUS, INC. 2 CANAL PARK, 4TH FLOOR CAMBRIDGE MA 02141
Parafestas Anastasios director C/O THE BOLLARD GROUP LLC ONE JOY STREET BOSTON MA 02108
Conine Steven director C/O WAYFAIR INC. 4 COPLEY PLACE BOSTON MA 02116
Hickok Lori A director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: HICKOK LORI A a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;}
Kaufer Stephen director C/O TRIPADVISOR, INC. 141 NEEDHAM STREET NEWTON MA 02464
Chrzan Oliver Ian officer: Chief Technology Officer 86 WASHINGTON ST. NEWTON MA 02458
Argonaut 22 Llc 10 percent owner 1 JOY STREET BOSTON MA 02108

CarGurus Headlines

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