Copart
CPRT
$27.87
+0.43%
Copart Inc. operates a global online salvage-vehicle auction platform, connecting insurance companies, dismantlers, rebuilders, and used-vehicle retailers across 11 countries through its VB3 bidding technology, with roughly 80% of vehicle volume sourced from insurers disposing of total-loss vehicles. As the dominant player in the U.S. salvage auction market, Copart functions as a high-margin, network-effect platform business whose moat rests on its physical yard footprint, buyer liquidity, and entrenched insurer relationships rather than on capital-intensive inventory ownership. The current investor narrative has shifted from a premium-growth compounder story to a debate over decelerating growth and margin durability: Q4 FY2026 earnings missed estimates with revenue up only 2.4% year-over-year, and the stock has de-rated sharply as the market questions whether elevated total-loss frequency and pricing tailwinds are normalizing. Recent headlines, including the Q4 earnings miss and a Q2 drop, alongside a mixed analyst tape featuring a JPMorgan upgrade to Overweight countered by persistent Barclays Underweight ratings, frame Copart as a quality franchise undergoing a growth reset rather than a broken business.…
CPRT
Copart
$27.87
Related headlines
Investment Opinion: Should I buy CPRT Today?
Rating: Hold. Copart is a high-quality franchise with a fortress balance sheet and strong free cash flow, but the current evidence of decelerating growth (2.4% revenue growth) and margin compression (gross margin down to 41.8% from 45.3%) argues for patience rather than aggressive accumulation. The analyst consensus is 'buy' with an average target of $39.00, implying about 40% upside, but the wide $25-$55 range and Barclays' Underweight rating show the Street is divided. Supporting evidence includes a forward P/E of 15.9x, which is well below Copart's historical premium, a 35.4% operating margin, $1.27B in TTM free cash flow, and a 16.3% ROE. Revenue growth has slowed to 2.4%, but the company remains highly profitable and debt-free, giving it time to fix the growth trajectory. The biggest risks are further margin erosion, a continued slowdown in insurer volume, and multiple compression if growth does not reaccelerate. This Hold would upgrade to Buy if revenue growth returns above 5% with gross margins stabilizing above 43%, or if the stock falls below $25 (near the 52-week low) while fundamentals remain intact. It would downgrade to Sell if gross margins fall below 40% or if revenue growth turns negative. On valuation, the stock looks fairly valued to slightly undervalued relative to its own history but not cheap relative to current growth.
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CPRT 12-Month Price Forecast
Copart is a high-quality business undergoing a growth reset, with the stock down 36.7% over the past year and trading at a forward P/E of 15.9x, well below its historical premium. The fortress balance sheet (debt-to-equity of 0.0097) and $1.27B in free cash flow provide a margin of safety, but the deceleration to 2.4% revenue growth and margin compression to 41.8% gross margin are real concerns. The analyst consensus of 'buy' with a $39 average target suggests upside, but the wide target range and mixed ratings (JPMorgan upgrade versus Barclays Underweight) reflect genuine uncertainty. I would upgrade to bullish if revenue growth returns above 5% with stable margins, and downgrade to bearish if gross margins fall below 40% or revenue growth turns negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Copart's 12-month outlook, with a consensus price target around $39.00 and implied upside of +39.9% versus the current price.
Average Target
$39.00
0 analysts
Implied Upside
+39.9%
vs. current price
Analyst Count
—
covering this stock
Price Range
$25 - $55
Analyst target range
Bulls vs Bears: CPRT Investment Factors
The bear case currently has stronger near-term evidence: revenue growth of just 2.4%, margin compression across gross, operating, and EBITDA lines, and a 36.7% one-year decline that has crushed relative strength. However, the bull case rests on a genuinely fortress balance sheet (debt-to-equity of 0.0097), strong free cash flow of $1.27B, and a forward P/E of 15.9x that is far below historical norms. The single most important tension is whether the Q4 slowdown represents a temporary normalization of total-loss frequency and pricing or a structural deceleration that permanently lowers Copart's growth algorithm. If growth reaccelerates toward mid-single digits with stable margins, the stock is materially undervalued; if 2-3% growth becomes the new normal, the current multiple is fair at best.
Bullish
- Fortress balance sheet with near-zero debt: Debt-to-equity is just 0.0097 and the current ratio is 7.91, meaning Copart carries essentially no leverage and has ample liquidity. This gives it the flexibility to keep investing in yard capacity and technology through a downturn without diluting shareholders.
- High-margin, cash-generative platform: TTM free cash flow is $1.27B against a $27.65B market cap, and the operating margin is 35.4% with a net margin of 31.8%. Even in a slower-growth quarter, Q4 FY2026 generated $327M of net income on $1.15B of revenue, underscoring the fee-based, asset-light economics of the auction network.
- Analyst consensus still sees upside: The average analyst target is $39.00 versus the current $27.87, implying roughly 40% upside, with a 'buy' consensus (mean rating 2.25) across 10 analysts. The high target of $55.00 suggests some on the Street view the de-rating as overdone.
- Valuation has compressed to reasonable levels: The forward P/E is 15.9x and EV/EBITDA is 12.5x, down sharply from the premium multiples Copart historically commanded. For a business still earning a 16.3% ROE and 10.3% ROA, this leaves room for multiple re-expansion if growth stabilizes.
Bearish
- Growth has decelerated sharply: Q4 FY2026 revenue grew only 2.4% year-over-year to $1.152B, and EPS of $0.35 missed estimates. This is a stark slowdown from the double-digit growth that justified Copart's premium multiple, and it raises the question of whether the total-loss frequency tailwind has normalized.
- Margins are compressing: Q4 gross margin fell to 41.8% from 45.3% in the prior-year quarter, and the operating margin dropped to 32.0% from 36.7%. The EBITDA margin also slipped to 41.0% from 47.3%, suggesting cost inflation and mix are eroding the company's historically elite profitability.
- Severe relative underperformance: The stock is down 36.7% over the past year versus a 15.5% gain for the S&P 500, a relative strength gap of -52.3 percentage points. Year-to-date it is down 26.2% while the market is up 11.9%, reflecting a persistent de-rating and negative momentum.
- Valuation still not cheap on some metrics: Despite the selloff, the trailing P/E is 18.7x, price-to-sales is 5.9x, and price-to-cash-flow is 17.2x. The negative PEG ratio of -6.0 reflects the earnings decline, and these multiples are not deep-value territory for a company growing revenue at only 2.4%.
CPRT Technical Analysis
Beta
1.06
1.06x market volatility
Max Drawdown
-44.8%
Largest decline past year
52-Week Range
$26-$46
Price range past year
Annual Return
-36.7%
Cumulative gain past year
| Period | CPRT Return | S&P 500 |
|---|---|---|
| 1m | -9.6% | +0.2% |
| 3m | +0.9% | +2.9% |
| 6m | -16.7% | +8.4% |
| 1y | -36.7% | +14.9% |
| ytd | -26.2% | +11.9% |
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CPRT Fundamental Analysis
Quarterly Revenue
$1.2B
2026-07
Revenue YoY Growth
+2.4%
YoY Comparison
Gross Margin
41.8%
Latest Quarter
Free Cash Flow
$1.3B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CPRT Overvalued?
PE
18.7x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 19x~38x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
12.5x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks center on margin durability and revenue concentration. Q4 FY2026 gross margin fell to 41.8% from 45.3% a year earlier, and the operating margin dropped to 32.0% from 36.7%, showing that cost inflation and mix are pressuring profitability even as revenue grows only 2.4%. About 80% of vehicle volume comes from insurance companies, so any shift in total-loss frequency, insurer sourcing strategies, or pricing pressure from competitors like IAA would hit both volume and fees. The company has no debt burden (debt-to-equity of 0.0097) and a current ratio of 7.91, so liquidity is not a concern, but the earnings volatility from a single end-market is real. Market and competitive risks include valuation compression and sector rotation. Even after a 36.7% one-year decline, the stock trades at 18.7x trailing earnings and 5.9x sales, which is not statistically cheap for a 2.4% grower; further multiple compression toward the 52-week low is possible if growth does not recover. Beta is 1.06, so the stock broadly tracks the market, but its -52.3 percentage point one-year relative strength gap versus the S&P 500 shows it is out of favor. Competition from CCC Intelligent Solutions (which surged on buyout talks) and other digital auction platforms could pressure Copart's fee structure, while insurer consolidation adds customer concentration risk. The worst-case scenario is a continued deceleration to low-single-digit or negative growth combined with further margin erosion, which would push the stock toward its 52-week low of $25.72 and the analyst low target of $25.00. From the current $27.87, that implies a downside of roughly 8-10% in the bear case, and a deeper de-rating toward the historical max drawdown of -46.3% would be possible if margins fell below 30%. The key trigger would be another earnings miss with revenue growth below 2% and gross margin below 40%.
FAQ
The most severe risk is continued margin compression: gross margin fell to 41.8% from 45.3% year-over-year, and if it drops below 40%, the stock could test its 52-week low of $25.72. The second risk is revenue concentration, with about 80% of volume from insurers, so any pullback in total-loss frequency or insurer sourcing would directly hit growth. The third risk is competitive disruption from IAA or digital auction platforms, which could pressure Copart's fee structure and market share. Finally, valuation risk remains: even after a 36.7% one-year decline, the stock is not statistically cheap, and further multiple compression is possible if growth does not recover.
The 12-month forecast has three scenarios: a bull case (25% probability) targeting $39-$55 if revenue growth reaccelerates above 5% and margins recover; a base case (55% probability) targeting $28-$39 with growth stabilizing at 3-5% and margins in the low-40s; and a bear case (20% probability) targeting $25-$28 if growth decelerates further and margins fall below 40%. The base case is most likely, assuming revenue growth of 3-5% and gross margin stabilizing around 42-43%, which would support the current forward EPS estimate of $2.19. The key assumption is that the total-loss frequency normalization is largely complete and that Copart's network moat prevents significant market share loss.
CPRT appears fairly valued to slightly undervalued relative to its own history, but not cheap relative to current growth. The forward P/E of 15.9x is well below the premium multiples Copart historically commanded, and the EV/EBITDA of 12.5x is reasonable for a high-margin platform. However, the trailing P/E of 18.7x and price-to-sales of 5.9x are not deep-value levels for a company growing revenue at only 2.4%. The negative PEG ratio of -6.0 reflects the earnings decline, making traditional growth-adjusted valuation difficult. The market is pricing in a stabilization of growth but not a return to the prior double-digit trajectory, which seems appropriate given the current evidence.
From a risk/reward perspective, CPRT is a Hold rather than a strong buy at $27.87. The stock offers roughly 40% upside to the average analyst target of $39.00, but the downside to the 52-week low of $25.72 is about 8%, and the bear case target of $25.00 implies a 10% decline. The forward P/E of 15.9x is attractive for a business with 35% operating margins and a debt-free balance sheet, but revenue growth of just 2.4% and gross margin compression to 41.8% are red flags. It is a good buy for long-term investors who believe the growth slowdown is temporary and are willing to wait for a reacceleration, but short-term traders may find better opportunities elsewhere given the negative momentum.
CPRT is better suited for long-term investment with a minimum holding period of 2-3 years. The company pays no dividend (payout ratio of 0) and has a beta of 1.06, so returns depend entirely on capital appreciation. The growth reset and margin compression create near-term uncertainty, making it a poor candidate for short-term trading. However, the fortress balance sheet, strong free cash flow of $1.27B, and dominant market position provide a solid foundation for long-term compounding once growth stabilizes. Investors should be prepared for volatility, as the stock has a max drawdown of -46.3% and a 52-week range of $25.72-$45.89.