How Would You Fix Copart?

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If you ran Copart (CPRT), you would start with costs. The company still makes money, but it keeps less of each sales dollar than it did in fiscal 2021. Copart kept 35.4% of its revenue as operating profit in fiscal 2026, almost twice the 18.5% for the S&P 500.

Yet the stock lost 32.9% over the past year, while the S&P 500 returned 13.3%. Over five years it is down 23.9%, against an 80.0% gain for the index. So if you took over on Monday, where is the most money at stake?

If You Ran Copart, Operating Margin Comes First

The most money sits in the margin Copart has given up since fiscal 2021. The operating margin reached 42.2% that year, its highest level of the past ten years. On fiscal 2026 revenue of $4.67 billion, the 6.8 points lost since then are worth about $318 million of operating profit a year.

Most of that slide came in gross margin, which fell from 49.9% to 44.7% over the same five years. Your goal would be to bring down the cost of handling each car. Management has said it is focused on managing facility costs down on a per unit basis.

Abroad, Copart Is Still Growing

International revenue rose 11.7% in fiscal Q4 2026, against 2.4% for the company as a whole, and international units sold rose 10%. Gross profit abroad came to $301.9 million for fiscal 2026, up 12.3%. Management said it now has “the German model figured out” and will start expanding across Europe.

That growth adds profit, but at a lower margin than Copart earns overall. The international gross margin was 35% in fiscal Q4 2026, while the whole company’s was 41.8% that quarter.

Copart’s Home Market Has Fewer Cars And Higher Costs

In the U.S., Copart sold 5.7% fewer cars in fiscal Q4 2026 than a year earlier. Management said that without the loss of one customer, U.S. insurance assignments would have been up 2.3%. Assignments are a different measure from cars sold, and U.S. insurance units sold fell 7.5% in the quarter.

Costs moved in the opposite direction. U.S. facility costs rose 14.2% per car in the quarter. Management tied this increase to its investment in new services such as long haul delivery and TitleExpress. In total, those costs rose 7.7%, so part of the per-car jump came from spreading them over fewer cars. Management said some of that spending is purely discretionary, and that it fully anticipates the cost per car to go down. Across all of Copart, the operating margin in that quarter was 32.0%, compared with 36.7% a year earlier.

Strengths You Would Keep, And Where Cash Goes

You would want to maintain Copart’s lead over its peers. Its operating margin sits far above the 5.9% median for its listed peers other than ACV, which it now owns and the 16.4% at RB Global, the best of the group. The balance sheet is also strong, with $4.49 billion of cash and short-term investments against $88.4 million of debt at the end of July 2026.

Cash presents the hardest decision. Copart spent $1.63 billion on buybacks in fiscal 2026, exceeding its $1.27 billion of free cash flow, and it paid for ACV Auctions in cash. ACV runs a digital marketplace for car dealers, and Copart completed the deal on October 16, 2026. Management had said it would still have over $2 billion of cash on its balance sheet after the deal, so the pace of buybacks is the decision you would face now.

A cash pile is worth only what the company does with it. Consider Tesla, holding $45.4 billion in cash, which has not spent about $340 million on free FSD rides for 1 in 10 US families with kids. Read Trefis Big Story: Musk’s Massive Marketing Miss Cost $10 Trillion.

Copart stock trades at 18.4 times earnings, against 22.8 for the S&P 500. Buyers appear to be pricing a business whose sales barely grew. Revenue rose 0.4% in fiscal 2026, after 9.7% the year before. The cost of handling each U.S. car, and the operating margin that comes with it, is the number to watch when Copart next reports, expected in November 2026.

Does This Mean You Should Act On CPRT?

Our purpose is to inform you with unique data so you make the right investment decisions. That said, betting on a single stock is always risky, no matter which direction you choose.

There is a smarter approach. Since its inception, the Trefis High Quality (HQ) Portfolio has returned 105%, beating the benchmark that combines the three major indices – the S&P 500, S&P Mid-cap, and Russell 2000. And it did so without taking the concentrated risk that comes with do-it-yourself stock picking. If that is how you want to invest, the HQ Portfolio is the place to start.

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