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CPRT Stock Study (10-14-25)

Posted by on December 2, 2024 at 07:00 | Last modified: October 14, 2025 09:33

I recently did a stock study on Copart, Inc. (CPRT, $44.07). The previous study is here.

M* writes:

     > Based in Dallas, Copart operates an online salvage vehicle auction
     > with operations in 11 countries across North America, Europe, and the
     > Middle East, facilitating over 3.5 million transactions annually. The
     > company utilizes its virtual bidding platform, VB3, to connect vehicle
     > sellers with over 750,000 registered buyers around the world. Buyers
     > primarily consist of vehicle dismantlers, rebuilders, individuals
     > and used vehicle retailers. About 80% of Copart’s vehicle volume is
     > supplied by auto insurance companies holding vehicles deemed a
     > total loss. Copart also offers services such as vehicle transportation,
     > storage, title transfer, and salvage value estimation. The company
     > primarily operates on a consignment basis and collects fees based
     > on the vehicle’s final selling price.

Over the past decade [FY ends Jul 31], this medium-size company has grown sales and earnings at annualized rates of 16.2% and 21.3%. Lines are textbook up, straight, and parallel. Value Line (VL) gives an Earnings Predictability score of 95.

Over the past decade, PTPM leads peer/industry averages while increasing from 31.2% (’16) to 40.8% (’25) with a last-5-year mean of 40.3%. ROE also leads peer/industry averages despite falling from 30.4% (’16) to 17.5% (’25) with a last-5-year mean of 22.3%. Debt-to-Capital is less than peer/industry averages while falling from 45.3% (’16) to 1.1% (’25) with a last-5-year mean of 4.0%.

Quick Ratio is 8.1 and Interest Coverage is N/A (debt-free as of FY 2025) per M* who gives a Financial Health grade of A (per BI website), rates the company “Standard” for Capital Allocation, and assigns a “Wide” Economic Moat. VL grades the company B++ for Financial Strength.

With regard to sales growth:

My 3.0% forecast is below the range.

With regard to EPS growth:

My 6.0% forecast is near bottom of the long-term-estimate range (mean of five: 9.4%). Initial value is ’25 EPS of $1.59/share.

My Forecast High P/E is 23.0. Over the past 10 years, high P/E increases from 23.2 (’16) to 40.5 (’25) with a last-5-year mean of 38.6 and last-5-year-mean average P/E of 31.8. I am near bottom of the range (only 19.4 in ’17 is less).

My Forecast Low P/E is 17.0. Over the past 10 years, low P/E increases from 14.6 (’16) to 28.4 (’25) with a last-5-year-mean of 25.1. I am forecasting toward bottom of the range (only ’16 and 14.9 in ’17 are less).

My Low Stock Price Forecast (LSPF) is $31.00. Default $27.00 based on initial value from above seems unreasonably low at 38.7% (38.2%) less than the previous close (52-week low). My arbitrary selection is 29.7% (29.1%) less.

These inputs land CPRT in the SELL zone with a U/D ratio of 0.3. Total Annualized Return (TAR) is 2.1%.

PAR (using Forecast Average—not High—P/E) of NEGATIVE 0.7% is not viable as an investment candidate. If a healthy margin of safety (MOS) anchors the study, then I can proceed based on TAR but even that is less than current risk-free rate (T-bills).

To assess MOS, I compare my inputs with those of Member Sentiment (MS). Based on 147 studies (my study and 38 other outliers excluded) over the past 90 days, averages (lower of mean/median) for projected sales growth, projected EPS growth, Forecast High P/E, and Forecast Low P/E are 10.1%, 10.5%, 35.6, and 23.1, respectively. I am much lower across the board. VL’s projected average annual P/E of 33.0 is higher than MS (29.4) and much higher than mine (20.0).

MS high / low EPS are $2.57 / $1.52 versus my $2.13 / $1.59 (per share). My high EPS is less due to a lower forecast growth rate. VL’s high EPS is less than both at $2.00.

MS LSPF of $35.70 implies a Forecast Low P/E of 23.5: greater than the above-stated 23.1. MS LSPF is 1.7% greater than the default $1.52/share * 23.1 = $35.11, which results in more aggressive zoning. MS LSPF is also 15.2% greater than mine.

With regard to valuation, PEG is 1.7 and 4.3 (low growth rate) per M* and my projected P/E, respectively: overvalued. Relative Value [(current P/E) / 5-year-mean average P/E] is slightly low at 0.86.

MOS is robust because my inputs are near or below respective analyst/historical ranges and MS averages. This is supported by an MS TAR 12.5% per year greater than my 2.1%.

I can entertain the possibility that my study is unreasonably conservative. My forecast growth rates are low and my forecast future P/E is exceedingly low. While the market places more of a premium on this stock over time, it’s almost like I refuse to move it into the 10-year range. For other context, M* and CFRA currently rate the stock with 4 and 5 stars, respectively. For VL, it’s “above average” with regard to long-term capital appreciation. The stock is now trading at a price first seen in ’23 but my study wouldn’t even consider touching it.

Per U/D, CPRT is a BUY under $32.50/share. Given forecast high price of $49, the BI TAR criterion [double in five years] is met at $24.50 (no dividend).

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