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Will Carvana Stock Keep Soaring to New Highs or is the Rally Overdone?

Hitting fresh 52-week highs of $312 a share on Tuesday, Carvana (CVNA - Free Report)  stock is sitting on gains of over +50% in 2025 and has soared more than +800% in the last three years. This blazing price performance has outperformed its Zacks Internet-Commerce peers, including e-commerce conglomerates such as Amazon (AMZN - Free Report)  and MercadoLibre (MELI - Free Report) . 

Starting to reach lofty growth expectations, investors may be wondering if the rally in Carvana stock will continue with its end-to-end online business model covering every aspect of used-car retailing, from sales, financing, and logistics, to inspections and repairs. Notably, CVNA is only 15% from its all-time high of $370 a share, which came in August of 2021.

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Cost-Cutting Initiatives & Strong Financial Results

Attributing to Carvana’s strong financial performance have been the company’s cost-cutting initiatives, including the restructuring of its debt. After several years of insolvency and bankruptcy concerns, Carvana currently has $7.1 billion in total liabilities, which is reassuringly beneath its total assets of $8.87 billion.

Furthermore, Carvana recently posted Q1 EPS of $1.51 in early May, which swung from an adjusted loss of -$0.41 a share in the prior period and crushed expectations of $0.75 by 101%. This came as Q1 sales increased 38% year over year to $4.23 billion and topped estimates of $4.04 billion.

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Monitoring Carvana’s Growth Trajectory

Taking market share from competitors such as Auto Trader Group (ATDRY - Free Report)  and Cars.com (CARS - Free Report) , Carvana’s total sales are now expected to increase 31% in fiscal 2025 and are projected to spike another 25% in FY26 to $22.55 billion.

More impressive, annual earnings are currently slated to soar 192% this year to $4.64 per share versus EPS of $1.59 in 2024. Plus, FY26 EPS is projected to increase another 33% to $6.16

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Compelling EPS Revisions

More compelling to Carvana’s attractive growth trajectory is that FY25 and FY26 EPS estimates have continued to trend higher in the last week and have now soared 35% and 23% over the last 90 days, respectively.

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Bottom Line

While Carvana stock is still trading at a noticeable premium to the broader market at 65.5X forward earnings, the trend of positive EPS revisions has started to level out the company’s P/E valuation. Even better, this does suggest more upside could be in store for Carvana stock with CVNA sporting a Zacks Rank #1 (Strong Buy).

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