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Dallas-based Copart, Inc. (CPRT) provides online auctions and vehicle remarketing services and commands a market cap of $52.8 billion. It has a presence in the U.S., Canada, Brazil, and various countries in Europe and Asia. The company offers a range of services for processing and selling vehicles through its online bidding platform, including facilitating transactions, estimating salvage value, transportation, financing, and more.
Companies worth $10 billion or more are generally described as "large-cap stocks," and Copart fits right into that category with its market cap exceeding this threshold, reflecting its substantial size and influence in the vehicle auction industry. Copart's capital-light business model yields high returns on capital and exhibits minimal exposure to economic cycles. Also, its diverse service offerings have solidified its position in the industry.
Despite its strengths, Copart has slipped 8.5% from its 52-week high of $58.58, which also happens to be its all-time high, achieved on April 1. Moreover, CPRT stock is down 5.8% in the past three months, trailing behind the Nasdaq Composite’s ($NASX) returns of 9% during the same time frame.
In the longer term, shares of Copart are up 9.4% on a YTD basis, and it has soared 22.1% over the past 52 weeks, lagging behind NASX’s 18.99% gain in 2024 and 30.6% return over the past 52 weeks.
To confirm this bullish trend, CPRT has consistently traded above its 200-day moving average and remained mostly above the 50-day moving average with a few fluctuations.
Despite its robust growth and financial stability, Copart's underperformance stems from concerns about its valuation, declining return on equity, and uncertainties related to the impact of emerging technologies like autonomous vehicles on its business model.
Moreover, the company is under legal scrutiny by the U.S. Department of Justice, Consumer Protection Branch for violation of money laundering laws, which continues to concern investors.
Additionally, CPRT’s shares were down 1.3% on May 16 following the release of its Q3 earnings. The company narrowly surpassed Wall Street estimates amidst plunging used vehicle prices and elevated repair costs. The company reported EPS of $0.39, slightly exceeding estimates of $0.38 per share, and its revenue reached $1.13 billion, slightly surpassing analyst estimates of $1.11 billion.
Copart’s rival, ACV Auctions Inc. (ACVA), has significantly underperformed CPRT, with its shares falling 1.7% over the past 52 weeks. However, AVCA stock’s 16.3% gains on a YTD basis outshines CPRT’s gains over the same time frame.
Furthermore, analysts are moderately bullish about CPRT’s prospects. The company has a consensus of “Moderate Buy” from the 7 analysts covering the stock. The mean target of $55.83 suggests a minuscule upside potential of 4% from the prevailing price levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
