Is the Market Overlooking Copart Stock’s Next Move?

We think Copart (CPRT) stock could be a good value buy. It is currently trading lower than average valuation, and has reasonable revenue growth and strong margins to go with its modest valuation.

Buying stocks with low valuations or trading well below their peaks but maintaining strong margins allows investors to capture mean reversion and valuation re-rating potential. The downside risk is potentially less because high-margin businesses can sustain earnings and recover faster when sentiment or market conditions improve

What Is Happening With CPRT

CPRT may be down -33% so far this year but is now 39% cheaper based on its P/S (Price-to-Sales) ratio compared to 1 year ago, and also trades at a P/E (Price-to-Earnings) ratio that is below S&P 500 median.

The stock may not reflect it yet, but here is what’s going well for the company. Copart maintains strong net margins, exceeding 34%, driven by its asset-light model and efficient VB3 platform for auction liquidity. While global unit sales have dipped, rising total loss frequency (22.8% in Q1 2025) and international expansion support future revenue. The valuation discount likely reflects recent revenue shortfalls despite profit beats and broader market uncertainties.

CPRT Has Strong Fundamentals

• Reasonable Revenue Growth: 6.7% LTM and 9.1% last 3 year average.
• Strong Margin: Nearly 37.5% 3-year average operating margin.
• No Major Margin Shock: Copart has avoided any large large margin collapse in the last 12 months.
• Modest Valuation: Despite encouraging fundamentals, CPRT stock trades at a PE multiple of 23.5

Below is a quick comparison of CPRT fundamentals with S&P medians.

*LTM: Last Twelve Months

But What Is The Risk Involved?

While CPRT stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. CPRT took some hits through the years, dropping over 43% in the Dot-Com Bubble and about 52% during the Global Financial Crisis. The 2018 correction knocked it down around 32%, while the Covid selloff wiped out close to 44%. Even the inflation shock saw a 35% dip. It shows that no matter how solid a stock looks, big market shocks can still lead to serious declines. Quality doesn’t mean immunity when investors hit the panic button. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read CPRT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

For more details and our view, see Buy or Sell CPRT Stock.

Stocks Like CPRT

Not ready to act on CPRT? Consider these alternatives:

1. Accenture (ACN)
2. PayPal (PYPL)
3. Constellation Brands (STZ)

We chose these stocks using the following criteria:

1. Greater than $2 Bil in market cap
2. Meaningfully below 1Y high
3. Current P/S < last few year average
4. Strong operating margin
5. P/E ratio below S&P 500 median

A portfolio of stocks with the criteria above would have performed has follows since 12/31/2016:

• Average 6-month and 12-month forward returns of 12.7% and 25.8% respectively
• Win rate (percentage of picks returning positive) of > 70% for both 6-month and 12-month periods
• Strategy consistent across market cycles

Move Beyond Single Stocks With A Multi Asset Portfolio

Individual stocks can soar or tank but multi asset exposure steadies the ride. A spread out portfolio captures upside while limiting the damage from any one market.

The asset allocation framework of Trefis’ Boston-based, wealth management partner yielded positive returns during the 2008-09 period when the S&P lost more than 40%. Our partner’ strategy now includes Trefis High Quality Portfolio, which has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices