CARVANA CO. (CVNA) Stock Analysis
CARVANA CO. (CVNA) Stock Analysis
Analysis from 10-Q filed 2025-10-29. Data as of Q4 2025.
Overall Grade: F (Concerning)
CARVANA CO. faces challenges in financial performance that warrant careful analysis.
| Metric | Value | Context |
|---|---|---|
| ROIC | -25.7% | Below expectations |
| FCF Margin | 4.4% | Cash flow pressure |
| Debt/Equity | 1.5x | Moderate leverage |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
Explore CARVANA CO.: Earnings History | Filing Intelligence | ROIC Analysis
Profitability: CARVANA CO. earns -25.7% ROIC
CARVANA CO.'s trailing-twelve-month ROIC of -25.7% (sector median: 8.8%), driven by NOPAT margin of -9.5% combined with asset turnover of 2.1x. Source: 10-Q filed 2025-10-29. Gross margin of 20.6% with operating margin at 9.3% reflects a competitive pricing environment.
| Metric | CVNA | Rating | Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -25.7% | Red flag | Below sector median of 8.8% |
| Return on Equity (ROE) | 71.6% | Excellent | Efficient use of shareholder equity |
| Gross Margin | 20.6% | Adequate | Competitive pricing environment |
| Operating Margin | 9.3% | Adequate | Moderate operational efficiency |
Cash Flow: CARVANA CO. generates $889.0M FCF at 4.4% margin, positive NaN/8 quarters
CARVANA CO. generated $889.0M in free cash flow (TTM), a 4.4% FCF margin, a margin that ranks Top 50% in Consumer Discretionary. FCF was positive in N/A of the last 8 quarters. Source: 10-Q filed 2025-10-29.
| Metric | CVNA | Rating | Context |
|---|---|---|---|
| Free Cash Flow Margin | 4.4% | Warning | Thin cash margins |
| Free Cash Flow (TTM) | $889.0M | Good | Positive cash generation |
| OCF/Net Income | 0.7x | Adequate | Potential accrual concerns |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
Balance Sheet: CARVANA CO. at 1.5x leverage
CARVANA CO.'s debt-to-equity ratio of 1.5x reflects elevated leverage. Total debt of $5.0B offset by $2.4B in cash. Source: 10-Q filed 2025-10-29.
| Metric | CVNA | Rating | Context |
|---|---|---|---|
| Debt to Equity | 1.5x | Adequate | Moderate leverage |
| Net Cash Position | $-2.6B | Warning | Net debt position |
Valuation: CARVANA CO. trades at 41.3x earnings
CARVANA CO. trades at a P/E of 41.3x. Free cash flow yield of 1.5% reflects market expectations for growth.
| Metric | CVNA | Rating | Context |
|---|---|---|---|
| P/E Ratio | 41.3x | Adequate | Premium valuation |
| EV/Sales | 3.0x | Good | Growth premium priced in |
| FCF Yield | 1.5% | Warning | Lower cash yield |
Capital Allocation: CARVANA CO. returns 0.0% shareholder yield
CARVANA CO.'s total shareholder yield is 0.0% (dividends + buybacks). Source: 10-Q filed 2025-10-29.
| Metric | CVNA | Rating | Context |
|---|---|---|---|
| Total Shareholder Yield | 0.0% | Warning | Dividend + buyback yield combined |
| Total Capital Returned (TTM) | $0 | Adequate | Dividends + buybacks returned to shareholders |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -25.7% | Bottom 10% | -2.9x below |
| Free Cash Flow Margin | 4.4% | Top 50% | 1.6x above |
| Gross Margin | 20.6% | Bottom 25% | 0.5x below |
| Operating Margin | 9.3% | Top 50% | 2.0x above |
| Return on Equity (ROE) | 71.6% | Top 5% | 6.7x above |
| P/E Ratio | 41.3x | N/A | - |
Financial Scorecard
| Metric | CVNA | Rating | Sector Context |
|---|---|---|---|
| Return on Invested Capital (ROIC) | -25.7% | Red flag | Below cost of capital |
| Free Cash Flow Margin | 4.4% | Warning | Top 50% of sector (median: 2.7%) |
| Gross Margin | 20.6% | Adequate | Bottom 25% of sector (median: 39.5%) |
| Debt to Equity Ratio | 146.5% | Adequate | Elevated but manageable |
| P/E Ratio (Price-to-Earnings) | 41.3x | Adequate | High expectations priced in |
| Free Cash Flow Yield | 1.5% | Warning | Growth-focused valuation |
Frequently Asked Questions
Q: What is CARVANA CO.'s Return on Invested Capital (ROIC)?
CARVANA CO. (CVNA) has a trailing twelve-month Return on Invested Capital (ROIC) of -25.7%. This compares below the sector median of 8.8%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is CARVANA CO.'s Free Cash Flow Margin?
CARVANA CO. (CVNA) has a free cash flow margin of 4.4%, generating $889.0 million in free cash flow over the trailing twelve months. A thin FCF margin may indicate heavy reinvestment or operational challenges.
Q: Is CARVANA CO. stock overvalued or undervalued?
CARVANA CO. (CVNA) trades at a P/E ratio of 41.3x, which is above the sector median of N/A. The EV/Sales multiple is 3.0x. Free cash flow yield is 1.5%, reflecting growth expectations priced into the stock.
Q: How much debt does CARVANA CO. have?
CARVANA CO. (CVNA) has a debt-to-equity ratio of 1.5x with total debt of $5.0 billion. Net debt position is $2.6 billion.
Q: What is CARVANA CO.'s revenue and earnings growth?
CARVANA CO. (CVNA) grew revenue by 48.6% year-over-year. Earnings per share increased by 428.1% compared to the prior year. Double-digit revenue growth indicates strong demand and market share gains.
Q: How does CARVANA CO. compare to competitors in Consumer Discretionary?
Compared to other companies in Consumer Discretionary, CARVANA CO. (CVNA) shows: ROIC of -25.7% is below the sector median of 8.8% (-2.9x median). FCF margin of 4.4% exceeds the sector median of 2.7% (Top 41% of sector). Gross margin at 20.6% is 18.9 percentage points lower than sector peers. These rankings are based on MetricDuck's analysis of all Consumer Discretionary companies with available SEC filings.
Q: What warning signs should I watch for with CARVANA CO.?
Investors in CARVANA CO. (CVNA) should monitor these potential warning signs: 1) FCF margin is thin at 4.4%, leaving limited buffer for economic downturns. 2) ROIC has been declining, potentially signaling deteriorating competitive position. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-29. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
Scope: This analysis covers SEC filing fundamentals — profitability, cash flow, balance sheet, and valuation metrics. For analyst estimates and price targets, consult sell-side research.
This analysis is for informational purposes only and does not constitute investment advice.