Copart
CPRT
$30.77
+1.38%
Copart Inc. operates a leading online vehicle auction and remarketing platform, specializing in salvage and total-loss vehicles across 11 countries in North America, Europe, and the Middle East. The company is a dominant market leader in the salvage auction space, distinguished by its proprietary VB3 virtual bidding platform and a vast global 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, shifting the debate towards the sustainability of its historically robust business model in a potentially softening vehicle market.…
CPRT
Copart
$30.77
Related headlines
Investment Opinion: Should I buy CPRT Today?
Rating & Thesis: Hold. The investment thesis centers on a high-quality business facing near-term cyclical headwinds, where the significant valuation compression appears to have priced in much of the bad news, but a clear catalyst for a re-rating is not yet present. The mixed and cautious analyst sentiment ('Underweight', 'Neutral', 'Outperform') reflects this uncertainty.
Supporting Evidence: The stock trades at a forward P/E of 19.3x, a significant discount to its trailing P/E of 28.2x, implying the market expects earnings to recover. However, this is challenged by negative revenue growth of -3.6% YoY and sequential margin compression. The company's exceptional financial strength, with a debt-to-equity of 0.011 and free cash flow of $1.41 billion TTM, provides a substantial margin of safety. The stock is also trading just 1.8% above its 52-week low, suggesting most near-term pessimism is baked in.
Risks & Conditions: The two biggest risks are 1) a failure to stabilize and return to revenue growth, and 2) further margin erosion. This Hold rating would upgrade to a Buy if quarterly revenue growth turns positive and operating margins stabilize above 35%, or if the forward P/E compresses further toward 15x without a deterioration in fundamentals. It would downgrade to a Sell if revenue declines accelerate beyond 5% YoY or net margins fall below 30%. Relative to its own history and given the growth deceleration, the stock appears fairly valued to slightly overvalued, as the market is still pricing in a return to historical growth rates that is not yet evident in the financials.
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CPRT 12-Month Price Forecast
The outlook for CPRT is one of high-quality stagnation. The company's dominant market position and fortress balance sheet prevent a full-blown crisis, but the clear deterioration in top-line growth and margins justifies the stock's severe derating. The base case of range-bound trading is most likely, as the market waits for evidence that the business has found a floor. The stance would upgrade to bullish on confirmation of revenue stabilization and margin improvement in the next two quarterly reports. It would turn bearish if the next earnings report shows an acceleration in revenue declines or a breakdown below the $32 support level.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Copart's 12-month outlook, with a consensus price target around $40.00 and implied upside of +30.0% versus the current price.
Average Target
$40.00
3 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
3
covering this stock
Price Range
$25 - $40
Analyst target range
Analyst coverage for Copart appears limited, with insufficient data provided on the exact number of analysts, consensus recommendation, or average target price to form a quantitative consensus view. The available institutional ratings show a mixed but generally cautious sentiment, with recent actions including an 'Underweight' from Barclays, a 'Neutral' from JP Morgan, and an 'Outperform' from Baird, all of which were reiterations with no changes in February 2026. The lack of a clear consensus target and the mixed ratings signal moderate uncertainty and a lack of strong conviction among covering analysts, which is somewhat atypical for a company of Copart's size and could contribute to heightened volatility as the market seeks clarity on its growth trajectory.
Bulls vs Bears: CPRT Investment Factors
The bear case currently holds stronger evidence, driven by concrete deterioration in fundamental metrics: negative revenue growth, margin compression, and a severe, persistent technical downtrend. The bull case rests on the company's durable competitive advantages, pristine financial health, and the argument that the valuation reset has been excessive. The single most important tension in the investment debate is whether Copart's current growth deceleration and margin pressure are a temporary cyclical headwind or the beginning of a structural decline in its historically robust business model. The resolution of this tension, likely visible in the next few quarters of revenue and margin trends, will dictate the stock's direction.
Bullish
- Dominant Market Leader: Copart operates the leading online salvage auction platform with a global network of over 750,000 registered buyers, facilitating over 4 million transactions annually. This entrenched position and network effect create a significant competitive moat, as 80% of its volume comes from insurance companies, a stable and recurring customer base.
- Exceptional Financial Health: The company has a fortress balance sheet with a negligible debt-to-equity ratio of 0.011 and a robust current ratio of 8.25, indicating minimal financial risk. It also generates substantial free cash flow of $1.41 billion TTM, providing ample resources to weather downturns and fund strategic initiatives without external financing.
- Strong and Resilient Profitability: Despite top-line pressure, Copart maintains high profitability with a gross margin of 43.94% and a net margin of 31.3% in its latest quarter. Its return on equity of 16.9% and return on assets of 11.34% demonstrate efficient capital allocation and a fundamentally sound business model.
- Valuation Compression Limits Downside: The stock's trailing P/E of 28.2x has compressed significantly from 36.3x as of Q3 2025 and the forward P/E of 19.3x implies a discount for expected earnings recovery. Trading just 16.7% above its 52-week low of $32.2, much of the valuation premium has been eroded, suggesting limited further downside if fundamentals stabilize.
Bearish
- Revenue Growth Has Stalled: Recent quarterly revenue of $1.12 billion represents a year-over-year decline of 3.6%, marking a deceleration from prior quarters. This is part of a sequential decline from a high of $1.21 billion in Q3 2025, indicating clear top-line pressure that challenges the core growth investment thesis.
- Significant Margin Compression: Profitability metrics are softening, with the net margin contracting to 31.3% from 35.0% in the prior quarter and the operating margin falling to 34.7% from 37.3%. This margin compression, occurring alongside revenue declines, suggests operational inefficiencies or pricing pressure in a potentially softening vehicle market.
- Severe Technical Downtrend: The stock is in a pronounced downtrend, down 36.27% over the past year and 13.97% over the past three months, trading near its 52-week low. With a relative strength of -64.48 versus the S&P 500, it shows severe underperformance and no signs of a meaningful reversal, indicating persistent negative market sentiment.
- Elevated Valuation Despite Weakness: Even after the steep decline, a trailing P/E of 28.2x and a P/S ratio of 9.4x remain elevated for a company experiencing revenue contraction. The PEG ratio of 2.1 suggests the stock is expensive relative to its near-term growth prospects, posing a risk of further multiple compression if growth does not reaccelerate.
CPRT Technical Analysis
The stock is in a pronounced and sustained downtrend, having declined 36.27% over the past year. With a current price of $32.77, it is trading near the bottom of its 52-week range, positioned at just 16.7% above its 52-week low of $32.2 and 36.6% below its 52-week high of $51.71; this positioning near multi-year lows suggests the stock is deeply oversold but may also indicate fundamental deterioration rather than a simple value opportunity. Recent momentum remains negative and aligns with the longer-term downtrend, with the stock down 13.97% over the past three months and 1.68% over the past month, showing no signs of a meaningful reversal despite the severe yearly drawdown. The stock's beta of 1.02 indicates its volatility is essentially in line with the broader market, yet its severe underperformance is stark, evidenced by a relative strength of -64.48 versus the S&P 500 over one year. Key technical support is firmly established at the 52-week low of $32.2, while initial resistance lies at the recent failed recovery level near $41.4 from late January; a decisive break below $32.2 could trigger another leg down, while a sustained move above the $38-$40 zone would be necessary to signal a potential trend change.
Beta
1.02
1.02x market volatility
Max Drawdown
-52.5%
Largest decline past year
52-Week Range
$30-$51
Price range past year
Annual Return
-38.9%
Cumulative gain past year
| Period | CPRT Return | S&P 500 |
|---|---|---|
| 1m | -7.2% | +4.6% |
| 3m | -18.5% | +12.6% |
| 6m | -20.5% | +10.4% |
| 1y | -38.9% | +27.0% |
| ytd | -18.5% | +11.0% |
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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 from a high of $1.21 billion in Q3 2025, indicating clear top-line pressure that challenges the core growth investment thesis. The company remains highly profitable with strong margins, reporting net income of $350.7 million and a gross margin of 43.94% for the quarter; however, profitability metrics have softened, with the net margin of 31.3% down from 35.0% in the prior quarter and the operating margin of 34.7% down from 37.3%, signaling margin compression. Copart maintains an exceptionally strong balance sheet with minimal financial risk, evidenced by a debt-to-equity ratio of just 0.011 and a robust current ratio of 8.25. The company generates substantial cash, with trailing twelve-month free cash flow of $1.41 billion, providing ample internal resources to fund operations and growth initiatives without reliance on external financing.
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 Copart's positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The stock trades at a trailing PE of 28.2x and a forward PE of 19.3x, with the significant discount in the forward multiple implying the market expects earnings growth to recover from a depressed base. Compared to sector averages, data is not available for a direct industry comparison, but the trailing PE of 28.2x appears elevated for a company experiencing revenue contraction and margin compression, suggesting the market may still be pricing in a return to historical growth rates. Historically, the stock's own valuation has compressed significantly from recent highs; for instance, its PE ratio was 36.3x as of Q3 2025 and has since fallen to the current 28.2x, placing it near the lower end of its recent historical range and indicating much of the valuation premium has been eroded, which could limit further downside if fundamentals stabilize.
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: The primary financial risk is the deceleration and recent contraction in revenue, with Q2 revenue declining 3.6% YoY and showing a sequential decline from the prior quarter's $1.16 billion. This is coupled with margin compression, as net margin fell 370 basis points QoQ to 31.3%. While the balance sheet is exceptionally strong (D/E of 0.011), the business model faces operational risk from its concentration, with approximately 80% of volume dependent on insurance companies declaring vehicles a total loss, making it sensitive to auto accident frequency and insurance claim trends.
Market & Competitive Risks: The stock's valuation remains a key market risk. Despite the significant price decline, a trailing P/E of 28.2x and a forward P/E of 19.3x may still be vulnerable to further compression if growth does not reaccelerate, especially given its high P/S ratio of 9.4x. With a beta of 1.02, its volatility aligns with the market, yet its severe underperformance (-36.3% vs. S&P 500's +28.2% over one year) indicates significant company-specific and sector-related headwinds that could persist. Competitive disruption, though limited by its network effect, remains a long-term threat.
Worst-Case Scenario: The worst-case scenario involves a continuation of the current downtrend where revenue declines accelerate and margin compression worsens due to a sustained softness in the vehicle market and increased competitive pressures. This could lead to a re-rating to a deep-value multiple. The realistic downside is to the 52-week low of $32.2, representing a loss of approximately -1.7% from the current price of $32.77. However, a break below this key support could trigger further selling, with the historical max drawdown of -49.4% suggesting a potential, though less likely, downside to the mid-$20s in an extreme scenario.
FAQ
The key risks are, in order of severity: 1) Growth Stagnation Risk: Revenue has turned negative (-3.6% YoY), and a failure to return to growth could lead to further multiple compression. 2) Margin Compression Risk: Net margin fell 370 bps sequentially to 31.3%; further erosion would directly impact earnings. 3) Cyclical Demand Risk: Approximately 80% of volume depends on insurance total-loss vehicles, making it sensitive to auto accident frequency and used car market health. 4) Valuation Risk: Despite a -36% price decline, valuation multiples (P/E 28.2x, P/S 9.4x) remain high, leaving room for further downside if growth disappoints.
The 12-month forecast presents three scenarios. The Base Case (55% probability) sees the stock trading between $35 and $40, as growth remains stagnant and the current valuation holds. The Bull Case (25% probability) projects a rally to $41-$46 on a return to revenue growth and margin stabilization. The Bear Case (20% probability) warns of a drop to $28-$32 if the downturn deepens. The Base Case is most likely, centered on the assumption that the company's strong fundamentals prevent a collapse, but near-term catalysts for a major re-rating are absent. The average analyst target is not available, but the mixed ratings suggest a lack of consensus.
CPRT appears fairly valued to slightly overvalued relative to its near-term prospects. While its trailing P/E of 28.2x has compressed from over 36x, it remains elevated for a company with contracting revenue. The forward P/E of 19.3x implies the market expects earnings to recover. Key valuation metrics like a P/S ratio of 9.4x and a PEG ratio of 2.1 suggest the market is still pricing in a return to growth that is not yet visible in the financials. Compared to its own history, the stock is cheaper, but relative to its current fundamentals, it is not clearly undervalued.
CPRT is a Hold, not a clear Buy at this moment. For value-oriented, patient investors with a multi-year horizon, the current price near 52-week lows and a forward P/E of 19.3x may represent an attractive entry point into a high-quality business. However, the lack of a near-term growth catalyst, evidenced by negative revenue growth of -3.6% YoY and margin compression, means investors could be catching a falling knife. It becomes a good buy for those who believe the current headwinds are cyclical and temporary, and who are willing to wait for a turnaround that may take several quarters to materialize.
CPRT is unsuitable for short-term trading due to its current lack of positive momentum, negative technical trends, and absence of near-term catalysts. It is best suited for long-term investors with a minimum 2-3 year horizon who can look through the cyclical downturn. The company's durable competitive advantages, strong balance sheet (D/E 0.011), and cash-generative model support a long-term hold thesis. However, investors must be prepared for continued volatility (beta 1.02) and potentially sideways performance until growth reaccelerates. The lack of a dividend means total return is solely dependent on price appreciation.