Copart
CPRT
$33.15
-0.42%
Copart Inc. operates a leading online salvage vehicle auction platform, facilitating transactions for total-loss vehicles across North America, Europe, and the Middle East. The company is a dominant market leader in the specialty business services industry, distinguished by its extensive global footprint, proprietary VB3 virtual bidding technology, and a vast network of over 750,000 registered buyers. The current investor narrative is dominated by concerns over growth deceleration and margin pressure, as highlighted by recent disappointing Q2 earnings that triggered a significant stock price decline, with debates centering on whether these challenges are cyclical or indicative of a more fundamental shift in the company's trajectory.…
CPRT
Copart
$33.15
Related headlines
Investment Opinion: Should I buy CPRT Today?
Rating: Hold. The core thesis is that while Copart's dominant position and pristine balance sheet provide a floor, near-term fundamental deterioration and a lack of positive catalysts warrant caution, making the stock dead money until growth re-accelerates. This aligns with the mixed analyst sentiment (Underweight, Neutral, Outperform) and the stock's consolidation near lows. Supporting evidence includes the compressed forward P/E of 19.8x (vs. trailing 28.2x), the 31.3% net margin demonstrating model strength, and the massive $5.1B cash pile. However, these are counterbalanced by the -3.6% YoY revenue decline, sequential margin compression, and a PEG ratio of 2.11 signaling overvaluation relative to growth. The stock offers limited implied upside to resistance at $38-$40 without a fundamental catalyst. The thesis would upgrade to Buy on evidence of revenue growth reacceleration (back to positive YoY) and gross margin stabilization above 45%. It would downgrade to Sell on a breakdown below the $32.20 support level or another quarter of sequential revenue and margin decline. Relative to its own history and current growth profile, the stock appears fairly valued to slightly overvalued, as the market is still assigning a premium multiple for growth that has yet to materialize.
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CPRT 12-Month Price Forecast
The investment case for CPRT is in a state of transition, caught between a deteriorating past growth story and an uncertain future recovery. The company's operational strengths (scale, profitability, cash flow) are undeniable but are currently being overshadowed by clear negative momentum in the core business metrics. The neutral stance reflects this balance: the downside appears limited by the balance sheet, but the upside is capped until growth re-emerges. The stance would upgrade to bullish on concrete evidence of quarter-over-quarter revenue and margin improvement. It would turn bearish on a breakdown below $32.20, signaling the market has lost faith in the stabilization narrative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Copart's 12-month outlook, with a consensus price target around $43.09 and implied upside of +30.0% versus the current price.
Average Target
$43.09
3 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
3
covering this stock
Price Range
$27 - $43
Analyst target range
Analyst coverage for Copart is limited, with only 3 analysts providing estimates, which can lead to higher volatility and less efficient price discovery typical for companies with sparse institutional coverage. The consensus sentiment appears mixed, as evidenced by recent institutional ratings: Barclays maintains an 'Underweight', JP Morgan a 'Neutral', and Baird an 'Outperform'. This lack of a clear bullish consensus aligns with the stock's significant underperformance and fundamental headwinds. The average revenue estimate for the period is approximately $5.15 billion, with a range from $5.09 billion to $5.20 billion, indicating relatively tight clustering and modest growth expectations. The average EPS estimate is $1.81, ranging from $1.77 to $1.89. The wide dispersion in recent analyst actions—from maintains to an upgrade from HSBC in September 2025—signals ongoing debate and uncertainty regarding the company's near-term trajectory and the appropriate valuation for its business model amid current challenges.
Bulls vs Bears: CPRT Investment Factors
The bearish evidence currently holds stronger weight, as it is grounded in concrete, deteriorating fundamentals (revenue decline, margin compression) and a severe, persistent technical breakdown. The bullish case rests on the company's defensive financial fortress and the potential for a cyclical recovery priced into a lower forward multiple. The single most important tension in the investment debate is whether the current revenue and margin pressures are a temporary, cyclical phenomenon related to vehicle supply and pricing, or indicative of a more permanent de-rating of Copart's growth profile and premium valuation. The resolution of this question will determine if the stock is a value trap or a compelling turnaround opportunity.
Bullish
- Fortress Balance Sheet: Copart maintains an exceptionally strong financial position with a debt-to-equity ratio of 0.011 and over $5.1 billion in cash. This provides immense flexibility to weather downturns, fund strategic initiatives, or return capital to shareholders, insulating the company from credit risk.
- High Profitability & Cash Flow: Despite recent pressure, the company retains robust profitability with a net margin of 31.3% and generates substantial free cash flow ($1.41B TTM). This high-margin, cash-generative business model provides a significant buffer against cyclical headwinds.
- Dominant Market Position: As the leading online salvage auction platform with over 750,000 registered buyers and a global footprint, Copart benefits from significant network effects and scale. This entrenched leadership position creates a durable competitive moat.
- Attractive Forward Valuation: The stock trades at a forward P/E of 19.8x, a significant discount to its trailing P/E of 28.2x and its own historical multiples. This forward multiple implies the market is pricing in a sharp earnings recovery, offering potential upside if achieved.
Bearish
- Revenue Decline & Growth Stall: Recent quarterly revenue of $1.12B declined -3.6% YoY, marking a deceleration and a trend of sequential quarterly declines. This top-line contraction signals a challenging operating environment, raising questions about the sustainability of the historical growth narrative.
- Severe Technical Downtrend: The stock is down -45.01% over the past year, underperforming the S&P 500 by -74.05%, and is trading near its 52-week low of $32.20. This persistent downtrend reflects deep-seated negative sentiment and a lack of buying conviction.
- Margin Compression: Gross margin contracted to 43.94% in Q2 2026 from 46.49% in the prior quarter, and operating margin fell to 34.65% from 37.29%. This dual pressure on revenue and profitability suggests fundamental deterioration, not just a cyclical slowdown.
- Expensive on Stalled Growth: Despite the sell-off, the stock's PEG ratio of 2.11 indicates it remains expensive relative to its recent growth rate. With revenue declining, the historical premium valuation is difficult to justify, creating risk of further multiple compression.
CPRT Technical Analysis
The stock is entrenched in a pronounced and sustained downtrend, evidenced by a staggering 1-year price decline of -45.01%. Currently trading at $33.27, the price sits at approximately 52% of its 52-week range ($32.20 to $63.85), positioning it much closer to the yearly low than the high, which suggests the market is pricing in significant fundamental deterioration rather than presenting a clear-cut value opportunity. The stock has also underperformed the broader market dramatically, with a relative strength of -74.05% over the past year, indicating severe sector or company-specific headwinds. Recent momentum shows continued weakness, with the stock down -18.01% over the last three months and posting a meager gain of just 0.76% over the past month. This short-term stabilization near the lows, following the sharp drop from February's ~$40 level to March's ~$33 lows, suggests the downtrend may be entering a phase of consolidation rather than exhibiting any meaningful reversal. The stock's beta of 1.142 indicates it is moderately more volatile than the broader market, which has amplified losses during this bearish phase. Key technical support is firmly established at the 52-week low of $32.20, with a breakdown below this level potentially signaling a new leg down in the downtrend. Immediate resistance lies near the recent failed recovery highs around $38-$40 from late January and early February. The stock's maximum drawdown of -49.2% over the provided period underscores the severity of the sell-off and the high volatility inherent in its current price action. A sustained move above the $40 resistance zone would be the first technical signal of a potential trend reversal.
Beta
1.02
1.02x market volatility
Max Drawdown
-49.2%
Largest decline past year
52-Week Range
$32-$64
Price range past year
Annual Return
-45.7%
Cumulative gain past year
| Period | CPRT Return | S&P 500 |
|---|---|---|
| 1m | -0.7% | +10.4% |
| 3m | -17.5% | +5.5% |
| 6m | -17.1% | +8.0% |
| 1y | -45.7% | +28.4% |
| ytd | -12.2% | +6.1% |
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CPRT Fundamental Analysis
Revenue growth has stalled and turned negative, with the most recent quarterly revenue of $1.12 billion representing a year-over-year decline of -3.6%. This marks a deceleration from the prior quarter's revenue of $1.16 billion and continues a trend of sequential quarterly revenue declines visible over the past year, indicating a challenging top-line environment likely driven by moderating vehicle supply and pricing pressures. The business is segmented into Service ($952.1M) and Product ($169.6M) revenues, with the Service segment constituting the vast majority of sales. Profitability remains robust on an absolute basis but is showing signs of compression. The company reported net income of $350.7 million for the quarter, with a net margin of 31.3%. However, gross margin contracted to 43.94% from 46.49% in the prior quarter, and operating margin declined to 34.65% from 37.29%. This margin pressure, coupled with the revenue decline, points to a less favorable operating environment. The trailing twelve-month free cash flow of $1.41 billion demonstrates the business's strong cash-generating ability. The balance sheet is exceptionally strong, characterized by minimal debt and high liquidity. The debt-to-equity ratio is a negligible 0.011, indicating an unleveraged financial structure. The current ratio of 8.25 and a cash hoard exceeding $5.1 billion provide immense financial flexibility to navigate downturns and fund growth initiatives. Return on Equity (ROE) of 16.9% and Return on Assets (ROA) of 11.0%, while healthy, have declined from higher levels in prior periods, reflecting the impact of lower profitability on capital efficiency.
Quarterly Revenue
$1.1B
2026-01
Revenue YoY Growth
-0.03%
YoY Comparison
Gross Margin
+0.43%
Latest Quarter
Free Cash Flow
$1.4B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CPRT Overvalued?
Given the company's substantial positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. Copart currently trades at a trailing PE of 28.2x and a forward PE of 19.8x based on analyst estimates. The significant gap between trailing and forward multiples implies the market expects a sharp recovery in earnings over the next twelve months, pricing in the current cyclical weakness as temporary. Compared to its own historical valuation, the stock's current trailing PE of 28.2x sits well below its multi-year historical range, which has frequently exceeded 30x and even reached above 35x in recent years. This de-rating suggests the market has significantly lowered its long-term growth and profitability expectations for the company. The Price-to-Sales ratio of 9.42x and Price-to-Book ratio of 4.76x also reflect a compression from previously higher levels. The forward PE of 19.8x, while a discount to its own history, must be weighed against the company's current growth profile. With revenue declining and margins compressing, the historical premium valuation is difficult to justify in the near term. The PEG ratio of 2.11, based on trailing earnings, suggests the stock is expensive relative to its recent growth rate, highlighting the valuation challenge as growth has stalled.
PE
28.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 24x~39x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
19.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks center on the company's deteriorating growth and profitability profile. Revenue has turned negative YoY (-3.6%), and key margins are compressing sequentially (gross margin down 255 bps QoQ). While the balance sheet is strong, the business model faces earnings volatility tied to auto insurance claims frequency and used vehicle prices. A continued decline in these drivers could pressure the high-margin service revenue, which constitutes 85% of sales, challenging the valuation which still implies a recovery (forward P/E 19.8x). Market & Competitive Risks are elevated given the stock's severe de-rating. Trading at a forward P/E of 19.8x, it remains at a premium to many industrials, yet its growth has stalled (PEG 2.11). The stock's beta of 1.142 indicates it is more volatile than the market, which has amplified its 49.2% maximum drawdown. Competitive disruption from digital rivals or a structural decline in total-loss vehicle volumes (80% of supply from insurers) pose external threats, while sparse analyst coverage (only 3 firms) can lead to exaggerated price moves on news. Worst-Case Scenario involves a failure of the anticipated earnings rebound, leading to a downward spiral of estimate cuts and further multiple compression. If revenue declines accelerate and margins contract toward industry averages, the stock could re-test and break its 52-week low of $32.20. Given the stock's high volatility and lack of near-term catalysts, a realistic downside scenario could see a drop of an additional 20-25% from the current $33.27, targeting the $25-$27 range, representing a total peak-to-trough drawdown exceeding 60% from its 52-week high.
FAQ
The key risks are, in order of severity: 1) Fundamental Deterioration Risk: Continued revenue decline and margin compression, turning cyclical weakness into a permanent de-rating (evidenced by recent -3.6% YoY revenue). 2) Valuation Compression Risk: Further multiple contraction if growth fails to return, given the still-premium forward P/E of 19.8x. 3) Cyclical Demand Risk: Prolonged downturn in auto insurance claims or used vehicle prices, which drive 80% of volume. 4) Sentiment & Technical Risk: The severe downtrend and high beta (1.142) could lead to continued volatility and further price declines irrespective of fundamentals.
The 12-month forecast is highly dependent on the resolution of current fundamental pressures. Our base case (60% probability) sees the stock trading in a range of $35 to $40 as growth stabilizes but does not re-accelerate meaningfully. The bull case (25% probability) targets $45-$50 on a successful cyclical rebound. The bear case (15% probability) warns of a drop to $25-$32 if deterioration worsens. The most likely outcome is sideways consolidation, with the key assumption being that the current quarter represents a trough in business performance.
CPRT's valuation presents a mixed picture. It is arguably overvalued relative to its current growth, as evidenced by a PEG ratio of 2.11. However, it is undervalued relative to its own historical premium, with a forward P/E of 19.8x sitting well below its multi-year average. The market is paying a fair price for a company in transition, implying expectations for a moderate earnings recovery. The valuation is not a clear bargain unless you have high conviction in a swift operational turnaround.
CPRT is not a compelling buy at this moment for most investors, but it presents a high-risk, high-potential-reward opportunity for the very patient. The stock has declined 45% in a year and trades near its lows, but revenue is still shrinking (-3.6% YoY) and margins are compressing. The 19.8x forward P/E prices in a recovery that is not yet evident. It could be a good buy for deep-value investors with a long time horizon who believe the cycle will turn, but for others, it's a 'show me' story requiring proof of fundamental improvement first.
CPRT is unsuitable for short-term trading due to its negative momentum, high volatility (beta 1.142), and lack of near-term positive catalysts. It is a candidate only for long-term investment, with a suggested minimum holding period of 2-3 years. This timeframe allows for the auto insurance cycle to potentially normalize and for the company's operational initiatives to bear fruit. The lack of a dividend further reduces its appeal for income-focused or short-term investors.