Copart, Inc.

Analysis of CPRT (Copart, Inc.)

Technical Analysis CPRT displays concerning technical weakness, trading near its 52-week low and significantly underperforming the market across all timeframes. While the stock is technically oversold, which sometimes precedes a bounce, the persistent downward trend and high beta indicate continued volatility risk. The current price action suggests market sentiment remains negative.

Fundamental Analysis Fundamentally, CPRT presents a strong profile with excellent revenue growth, exceptional profitability margins near 35%, and rock-solid financial health marked by minimal debt and superior cash flow generation. The company demonstrates operational efficiency through strong inventory management and a negative cash conversion cycle, though returns on equity and capital are modest. These fundamentals indicate a high-quality business with durable competitive advantages.

Valuation & Risk Valuation presents challenges, with moderate P/E ratios but a very high PEG ratio and extremely elevated EV/EBITDA, suggesting the stock is priced for perfection. The significant volatility risk, evidenced by a beta above 1.0 and a substantial historical maximum drawdown, means investors should expect price swings. The valuation premium requires confidence in sustained high growth.

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Recommendation: **HOLD**

Current Recommendation: HOLD. While CPRT's outstanding fundamentals and oversold technical condition are appealing, the rich valuation creates limited margin of safety. Investors should wait for either more attractive entry points or clearer catalysts for earnings growth acceleration before establishing new positions. Existing shareholders might maintain positions given the company's quality, but new investment carries elevated risk at current levels.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the provided analysis, here is a 12-month outlook for CPRT:

The outlook for CPRT over the next year is mixed, hinging on the stock's ability to grow into its premium valuation. The key catalyst would be a reacceleration of earnings growth that justifies its high multiples, potentially driven by continued operational execution and market share gains in the vehicle auction space. The primary risk is that the current growth rate disappoints, leading to a de-rating of the stock given its elevated valuation metrics (high PEG, EV/EBITDA) and its history of significant volatility. Without a specific analyst target, the price action will likely remain volatile and range-bound until a clearer growth trajectory emerges, suggesting a cautious hold stance is appropriate.

Wall Street Consensus

Most Wall Street analysts are optimistic about Copart, Inc.'s 12-month outlook, with consensus target around $37.65, indicating expected upside potential.

Overall, CPRT has investment potential but also faces challenges. Here are key factors to weigh before investing.

CPRT has experienced significant underperformance with a persistent downward trend across all measured timeframes. The stock has consistently lagged the broader market, experiencing a substantial decline from its 52-week high.

The short-term performance is weak, with the stock declining approximately 9% over both one and three-month periods. CPRT has meaningfully underperformed the market by over 10 percentage points during this three-month span, highlighting its pronounced weakness relative to the broader market benchmark.

Currently trading just 2.1% above its 52-week low, CPRT is in deeply oversold territory, positioned near the extreme bottom of its annual range. The proximity to the yearly low and the stock's beta above 1.0 suggest heightened volatility is contributing to this weakness, presenting a technically oversold condition.

Revenue & Profitability: CPRT demonstrates solid revenue growth with Q1 2026 revenue increasing to $1.16 billion from $1.13 billion in the prior quarter, while maintaining strong profitability. The company exhibits excellent margin performance, with a net profit margin of 34.95% and operating margin of 37.29%, indicating efficient cost control and strong pricing power in its operations.

Financial Health: The company maintains exceptional financial strength with a minimal debt ratio of just 0.94% and robust liquidity metrics, including a current ratio of 7.94 and cash ratio of 6.70. CFO significantly exceeds net income at 46.3% of revenue, supported by strong coverage ratios and negative cash conversion cycle, reflecting superior cash generation and working capital management.

Operational Efficiency: CPRT shows solid operational performance with an ROE of 4.21% and ROCE of 4.39%, though asset turnover remains modest at 0.11. The company demonstrates excellent inventory management with high turnover of 15.3x, while maintaining efficient receivable collection and payable terms that contribute to its favorable cash conversion cycle.

Valuation Level: With a trailing PE of 22.85 and a forward PE of 25.77, CPRT trades at a moderate earnings multiple. However, the PEG ratio of 10.57 indicates the stock is significantly overvalued relative to its expected earnings growth, while the exceptionally high EV/EBITDA of 76.31 further signals a premium valuation. The disparity between the PE and other metrics suggests the market is pricing in substantial future prospects that are not yet reflected in current earnings or cash flow.

Peer Comparison: Unable to provide a peer comparison as no industry average data has been provided. A meaningful assessment of CPRT's valuation relative to its sector peers would require benchmark metrics such as industry average PE, PB, and EV/EBITDA ratios for context.

Volatility Risk: CPRT's beta of 1.083 indicates it is slightly more volatile than the broader market, implying it will typically experience amplified price movements. This is corroborated by a significant one-year maximum drawdown of -42.48%, highlighting a substantial historical risk of capital loss during market downturns.

Other Risks: The absence of notable short interest suggests that bearish speculative pressure is currently not a significant concern. However, given that short interest is reported as "None," analysts should verify data accuracy and remain attentive to other typical risks such as sector-specific headwinds or liquidity constraints that may not be immediately apparent.