Copart
CPRT
$30.05
-1.15%
Copart Inc. operates a global online salvage vehicle auction platform, facilitating over 4 million transactions annually across 11 countries by connecting sellers, primarily auto insurance companies, with a vast network of registered buyers. The company is a dominant market leader in the specialty business services industry, distinguished by its proprietary VB3 virtual bidding platform which creates a powerful network effect and significant barriers to entry. The current investor narrative is focused on growth challenges, as recent quarterly earnings have disappointed the market, signaling potential headwinds in its core salvage auction volumes and sparking debate about the sustainability of its historically strong margins and cash flow generation.…
CPRT
Copart
$30.05
Related headlines
Investment Opinion: Should I buy CPRT Today?
Rating: Hold. The core thesis is that Copart's formidable financial strength and dominant market position are currently offset by clear signs of fundamental deterioration, creating a balanced but uncertain risk/reward profile at the current price.
Supporting evidence includes the company's pristine balance sheet (D/E 0.011), robust profitability (net margin 31.27%), and substantial cash flow generation ($1.41B FCF TTM). However, the forward PE of 17.93x, while lower than the trailing multiple, still implies a growth rebound that is not yet evident in the declining revenue (-3.58% YoY) and compressing margins. Analyst sentiment is mixed and coverage is thin (only 3 analysts), with no clear consensus price target to provide directional conviction.
The thesis would upgrade to a Buy if quarterly revenue growth turns positive and gross margins stabilize above 45%, signaling the downturn is temporary. It would downgrade to a Sell if revenue decline accelerates beyond 5% YoY or if operating margin falls below 30%, confirming a structural decline. Based on the current data, the stock appears fairly valued to slightly overvalued relative to its near-term growth prospects, but deeply undervalued if its long-term competitive advantages remain intact.
Sign up to view all
CPRT 12-Month Price Forecast
The investment case for Copart is at an inflection point. The bearish evidence—negative revenue growth and negative price momentum—is concrete and recent. The bullish evidence—profitability and financial strength—is foundational but potentially eroding. The neutral stance reflects this high uncertainty; the stock is not cheap enough to be a clear value play nor growing enough to be a clear growth play. The stance would turn bullish on evidence of revenue stabilization and margin resilience in the next quarter. It would turn bearish if the next earnings report shows the deterioration is accelerating. The high cash flow and strong balance sheet limit the ultimate downside, but the path to meaningful upside is currently obscured.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Copart's 12-month outlook, with a consensus price target around $39.07 and implied upside of +30.0% versus the current price.
Average Target
$39.07
3 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
3
covering this stock
Price Range
$24 - $39
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 a company of its size. The available data shows a wide range of earnings estimates, with a low of $1.66, an average of $1.72, and a high of $1.78, indicating some uncertainty around the near-term profit trajectory. The institutional ratings data reveals a mixed but generally cautious sentiment: recent actions include Barclays maintaining an 'Underweight', JP Morgan a 'Neutral', and Baird an 'Outperform', with the only recent change being HSBC upgrading to 'Buy' from 'Hold' in September 2025. The lack of a consensus price target and the minimal number of analysts covering the stock suggest institutional interest may be waning or that the investment thesis is in flux following the disappointing quarterly results, leaving investors with less guidance amid the current fundamental uncertainty.
Bulls vs Bears: CPRT Investment Factors
The evidence currently tilts bearish, as the concrete deterioration in revenue growth and margins outweighs the company's still-strong financial fortress. The most critical tension in the investment debate is whether the recent revenue decline is a temporary cyclical hiccup or the beginning of a structural slowdown in Copart's core salvage auction market. If it's the former, the stock's compressed valuation and strong balance sheet present a compelling opportunity. If it's the latter, the premium multiples (PE 28x, PS 9.4x) remain unjustified, and further downside is likely. The resolution of this growth question, as evidenced by upcoming quarterly revenue trends, will be the primary driver of the stock's direction.
Bullish
- Exceptional Profitability & Cash Flow: Copart maintains a net margin of 31.27% and generates massive free cash flow of $1.41 billion TTM. This robust financial engine funds aggressive share repurchases ($218.2M last quarter) and provides a significant margin of safety.
- Fortress Balance Sheet: The company has virtually no debt, with a D/E ratio of 0.011, and immense liquidity with a current ratio of 8.25. This rock-solid financial position eliminates solvency risk and provides capital to navigate downturns or pursue acquisitions.
- Compressed Valuation from Peaks: The stock's trailing PE of 28.19x is well below its recent highs above 39x, and its forward PE of 17.93x implies a significant earnings recovery is priced in. Trading just 1.6% above its 52-week low suggests most negative news is already reflected in the price.
- Dominant Market Position & Network: Copart's proprietary VB3 platform and global scale (4M+ annual transactions) create powerful network effects and high barriers to entry. This structural advantage underpins its historically high returns on equity (16.90%).
Bearish
- Revenue Decline & Growth Stall: Recent quarterly revenue of $1.12B declined 3.58% YoY and fell sequentially from $1.16B. This top-line contraction signals fundamental pressure in core auction volumes, challenging the growth narrative that has long supported its premium valuation.
- Margin Compression Emerging: Gross margin fell to 43.94% from 46.49% in the prior quarter, and operating margin declined to 34.65% from 37.29%. This suggests operational leverage is reversing as revenue falls, threatening the company's exceptional profitability profile.
- Severe Technical Downtrend: The stock is down 36.86% over one year and 22.63% over six months, significantly underperforming the S&P 500. With a relative strength of -61.85, momentum is decisively negative, indicating persistent selling pressure and a lack of investor confidence.
- Elevated Valuation Despite Weakness: Even after the steep decline, Copart trades at a trailing PE of 28.19x and a PS ratio of 9.42x, a significant premium to the broader market. This leaves the stock vulnerable to further multiple compression if growth does not reaccelerate.
CPRT Technical Analysis
The stock is in a pronounced and sustained downtrend, with a 1-year price change of -36.86% and a 6-month decline of -22.63%, significantly underperforming the broader market. As of the latest close of $30.23, the stock is trading near the bottom of its 52-week range, approximately 1.6% above its 52-week low of $29.46 and 60% below its 52-week high of $50.11; this positioning near multi-year lows suggests the market is pricing in significant fundamental deterioration, presenting a potential value trap rather than a clear opportunity. Recent momentum remains decisively negative, with the stock down 8.73% over the past month and 8.00% over the past three months, indicating the downtrend is accelerating rather than finding a base, a stark divergence from the S&P 500's positive returns of 0.74% and 15.14% over the same periods, respectively. Key technical support is firmly established at the 52-week low of $29.46, while overhead resistance looms at the 52-week high of $50.11; a decisive breakdown below $29.46 would likely trigger further technical selling, while any recovery would face numerous resistance levels from the recent consolidation. With a beta of 1.002, the stock's volatility is in line with the market, but its severe relative weakness, evidenced by a -61.85 relative strength reading over one year, highlights significant stock-specific risk that has overwhelmed any market correlation.
Beta
1.00
1.00x market volatility
Max Drawdown
-51.7%
Largest decline past year
52-Week Range
$29-$50
Price range past year
Annual Return
-37.6%
Cumulative gain past year
| Period | CPRT Return | S&P 500 |
|---|---|---|
| 1m | -9.6% | -2.2% |
| 3m | -7.3% | +15.8% |
| 6m | -23.5% | +6.4% |
| 1y | -37.6% | +20.9% |
| ytd | -20.4% | +7.7% |
Bobby - Your AI Investment Partner
Get real-time data, AI-driven personalized investment analysis to make smarter investment decisions
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 3.58%, and a sequential drop from the prior quarter's $1.16 billion, indicating a concerning deceleration in the core auction business. The revenue mix shows Services ($952.1 million) vastly outweighing Product sales ($169.6 million), but the overall trend points to volume or pricing pressure in the service segment that is driving the top-line contraction. The company remains highly profitable with strong margins, reporting net income of $350.7 million and a net margin of 31.27% for the quarter, though this represents a decline from the $403.7 million net income in the previous quarter. Gross margin for the quarter was 43.94%, down from 46.49% in the prior quarter, indicating some compression, while the operating margin of 34.65% remains robust for the industry but is also down sequentially from 37.29%, suggesting operational leverage is working in reverse as revenue falls. The balance sheet is exceptionally strong with minimal financial risk, featuring a debt-to-equity ratio of just 0.011 and a formidable current ratio of 8.25, indicating ample liquidity. The company generates substantial cash flow, with trailing twelve-month free cash flow of $1.41 billion, providing significant internal funding capacity for growth and share repurchases, as evidenced by the $218.2 million in stock bought back in the latest quarter, while its return on equity of 16.90% demonstrates efficient use of shareholder capital.
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
Open an Account, get $2 TSLA now!
Valuation Analysis: Is CPRT Overvalued?
Given the company's substantial net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The trailing PE ratio is 28.19x, while the forward PE is notably lower at 17.93x, indicating the market expects a significant rebound in earnings growth, aligning with analyst EPS estimates averaging $1.72 for the coming period. Compared to its own historical range, the current trailing PE of 28.19x sits below the multi-quarter highs seen above 39x in mid-2024 but is above the lows near 25x from late 2025, suggesting the valuation has compressed from peak levels but may not yet be at a historical bargain, reflecting the market's recalibration of growth expectations. The stock trades at a significant premium to broader market multiples, as evidenced by its Price-to-Sales ratio of 9.42x and EV/EBITDA of 19.46x, which are elevated for the industrials sector; this premium has historically been justified by Copart's exceptional margins, asset-light model, and growth profile, but is now being tested by the recent revenue decline and margin compression.
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 ability to reignite growth and defend its premium margins. The 3.58% YoY revenue decline and sequential drop from $1.16B to $1.12B indicate volume or pricing pressure in its core service segment, which constitutes 85% of revenue. While net margins remain high at 31.27%, the quarterly compression in both gross margin (from 46.49% to 43.94%) and operating margin (from 37.29% to 34.65%) suggests operational leverage is working in reverse. The company's valuation (PE 28x, PS 9.4x) is heavily dependent on a return to growth; continued stagnation would likely trigger significant multiple compression.
Market & Competitive Risks are heightened by Copart's elevated valuation trading at a substantial premium to the industrials sector. With a beta of 1.002, its volatility is in line with the market, but its severe -61.85 relative strength indicates overwhelming stock-specific risk. The recent news of disappointing Q2 earnings highlights the market's sensitivity to any growth stumbles. A prolonged period of high interest rates could compress the multiples of all growth-oriented, premium-valuation stocks like Copart, irrespective of its strong balance sheet.
The Worst-Case Scenario involves a confirmation that the recent revenue decline is structural, not cyclical, perhaps due to a permanent reduction in total loss frequency from safer vehicles or increased competition. This could lead to sustained margin erosion as fixed costs weigh on a shrinking revenue base. In this adverse scenario, the stock could re-test and break its 52-week low of $29.46. Given the historical max drawdown of -53.76%, a realistic downside from the current price of $30.23 could be a further 20-30%, potentially targeting the mid-$20s range as the market fully prices in a no-growth, lower-margin future.
FAQ
The key risks are, in order of severity: 1) Growth Stagnation Risk: The core risk is that the recent revenue decline (-3.58% YoY) becomes a sustained trend, invalidating the growth premium. 2) Margin Erosion Risk: Sequential declines in gross and operating margins suggest profitability is under pressure, which is critical for a business valued on its high returns. 3) Valuation Compression Risk: Trading at a PE of 28x and PS of 9.4x, the stock remains vulnerable to multiple contraction if growth does not reaccelerate. 4) Market Sentiment Risk: The severe technical downtrend (-36.86% over 1 year) and negative relative strength indicate poor investor sentiment that could persist regardless of fundamentals.
Our 12-month outlook presents three scenarios. The Base Case (55% probability) sees the stock trading between $35 and $40, as revenue stabilizes and the current forward PE of ~18x holds. The Bull Case (25% probability) targets $45 to $50, driven by a return to growth and margin expansion. The Bear Case (20% probability) warns of a drop to $25-$30 if the fundamental deterioration worsens. The Base Case is most likely, predicated on the assumption that the current pressures are cyclical rather than structural, but that a swift return to high growth is unlikely.
CPRT's valuation is in a grey area. Its trailing PE of 28.19x and Price-to-Sales of 9.42x represent a significant premium to the market and many industrials, which seems difficult to justify given the current revenue decline. However, its forward PE of 17.93x suggests the market has already priced in a substantial earnings rebound. Compared to its own history, the multiple has compressed from peaks above 39x. The stock is likely fairly valued to slightly overvalued relative to its immediate prospects, but could be considered undervalued if one has high conviction in a return to its historical growth and margin profile.
CPRT is a contentious buy at current levels. For investors with a high risk tolerance and a long-term horizon, the 36% decline from its high and its fortress balance sheet present a potential opportunity. However, with revenue declining 3.58% YoY and margins compressing, the near-term fundamentals are weak. The stock is only a good buy for those who believe the recent troubles are temporary and that the company's dominant platform will drive a growth recovery. The lack of a clear analyst consensus and thin coverage adds to the uncertainty.
CPRT is unsuitable for short-term trading due to its high uncertainty, negative momentum, and lack of near-term positive catalysts. It is better suited for a long-term investment horizon of 3-5 years, allowing time for the company to potentially resolve its growth challenges and for its competitive advantages and cash generation to compound value. The stock's beta of 1.002 indicates market-average volatility, but its specific issues require patience. Given the current fundamental flux, a minimum holding period of 18-24 months is suggested to properly assess whether the investment thesis is intact.