Copart, Inc. (CPRT), a leading online vehicle auction company, is scheduled to release fiscal 2024 first-quarter earnings after 4 p.m. Eastern Time on Thursday, November 16, 2023. Analysts expect the company’s revenue and EPS for the first quarter (ended October 2023) to increase 10.7% and 27.4% year-over-year to $989.28 million and $0.32, respectively.

Further, the company reported a beat on top and bottom lines in the fourth quarter of fiscal 2023. CPRT posted revenue of $997.59 million, exceeding analysts’ estimate of $962.84 million. This compared to revenue of $883.39 million in the same quarter of 2022. Its EPS came in at $0.34, compared to the consensus estimate of $0.32 and up 21.4% year-over-year.

Moreover, the company surpassed the consensus revenue estimates in all four trailing quarters and the consensus EPS estimates in three of the trailing four quarters, which is impressive.

On October 10, CPRT announced a new strategic investment and partnership with Purple Wave, Inc. Founded in 2000, Purple Wave is a leader in the online equipment auction industry, facilitating the sale of construction, agriculture, and fleet equipment directly from a seller’s location via its no-reserve auction platform on purplewave.com.

“Through our strategic investment and partnership, we will leverage our areas of expertise for the benefit of our respective marketplaces. And perhaps most critically, we share a fundamental approach to business – a commitment to creating long-term value for our industry participants and our shareholders through excellence and innovation, said Jeff Liaw, Co-CEO of CPRT.

Also, on September 12, CPRT and Hi Marley, the intelligent conversational platform built for P&C insurance and powered by SMS, announced a partnership to co-develop products to streamline the automotive total loss process.

This strategic partnership will build concise and seamless SMS communication journeys between policyholder and carrier, streamline the total loss triage process by utilizing AI, and enable the claims ecosystem – carriers, policyholders, repair shops, and Copart – to collaborate through real-time, in-app notifications and replies. This collaboration should bode well for both the companies.

Shares of CPRT have surged 18.5% over the past six months and 57.3% year-to-date to close its last trading session at $48.34. Also, the stock has gained 57.9% over the past year.

Let’s look at factors that could influence CPRT’s performance in the upcoming months.

Robust Financials

For the fourth quarter that ended July 31, 2023, CPRT’s total service revenues and vehicle sales increased 12.9% year-over-year to $997.59 million, while its gross profit rose 19.9% from the year-ago value to $457.58 million. Its operating income grew 20.3% year-over-year to $390.62 million.

Furthermore, the company’s non-GAAP net income rose 21.7% from the year-ago value to $330.43 million, and its non-GAAP net income per share came in at $0.34, an increase of 21.4% year-over-year.

Impressive Historical Growth

Over the past three years, CPRT’s revenue and EBITDA grew at CAGRs of 20.6% and 21.8%, respectively. Its EBIT rose at a CAGR of 22.1% over the same time frame. Also, the company’s net income and EPS increased at CAGRs of 20.9% and 20.5% over the same period, respectively.

Additionally, the company’s levered free cash flow grew at a CAGR of 81.1% over the same time frame, while its total assets increased at 24.9% CAGR.

Upbeat Analyst Estimates

Analysts expect CPRT’s revenue for the fiscal year (ending July 2024) to increase 7.9% year-over-year to $4.17 billion. The consensus EPS estimate of $1.42 for the current year reflects a 13% year-over-year improvement.

For the fiscal year 2025, the company’s revenue and EPS are expected to grow 9.5% and 12.1% year-over-year to $4.57 billion and $1.60, respectively.

High Profitability

CPRT’s trailing-12-month gross profit margin of 45.73% is 50.7% higher than the 30.35% industry average. Likewise, the stock’s trailing-12-month EBITDA margin and net income margin of 42.35% and 15.08% are significantly higher than the industry averages of 13.74% and 6.05%, respectively.

Moreover, the stock’s trailing-12-month levered FCF margin of 15.08% is 139.2% higher than the industry average of 6.31%. Its trailing-12-month ROCE, ROTC, and ROTA of 23.32%, 17.12%, and 18.37% favorably compared to the respective industry averages of 12.45%, 6.86%, and 4.96%.

POWR Ratings Reflect Promise

CPRT’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

Our proprietary rating system also evaluates each stock based on eight distinct categories. CPRT has a B grade for Quality, consistent with its higher profitability relative to its peers.

In addition, the stock has a B grade for Sentiment, in sync with optimistic analyst expectations.

CPRT is ranked #6 out of 20 stocks in the B-rated Auto Dealers & Rentals industry.

Beyond what I have stated above, we have also given CPRT grades for Growth, Value, Momentum, and Stability. Get access to all the CPRT Ratings here.

Bottom Line

CPRT, a global leader in online auto auctions, topped analysts’ estimates for revenue and earnings in the fourth quarter of fiscal 2023. Further, analysts seem highly optimistic about CPRT’s outlook, driven by solid demand for its services, strategic partnerships, and investments.

CPRT’s stock is currently trading above its 50-day and 200-day moving averages of $44.61 and $41.46, respectively. Given its strong financial performance, robust profitability, solid price action, and bright growth prospects, this auto could be an ideal investment now.

How Does Copart, Inc. (CPRT) Stack Up Against Its Peers?

While CPRT has an overall POWR Rating of B, investors could also check out these other stocks within the Auto Dealers & Rentals industry with B (Buy) rating: AutoNation, Inc. (AN), Group 1 Automotive, Inc. (GPI), and Cars.com Inc. (CARS).

For exploring more A and B-rated auto stocks, click here.

What To Do Next?

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CPRT shares were unchanged in premarket trading Tuesday. Year-to-date, CPRT has gained 58.78%, versus a 16.38% rise in the benchmark S&P 500 index during the same period.

Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.

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