Copart Stock Looks Undervalued, Ready to Move Up?

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 is now 41% 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’s capital-light, online auction model delivers strong margins, with Q1 FY2026 gross margin at 46.5% due to operational leverage and record average selling prices (ASPs) fueled by diverse global buyers. While Q1 FY2026 revenue growth was a modest 0.7% amid lower insurance unit volumes and fewer catastrophic events, rising total loss frequency (22.6% in 2025) and expanding international demand for salvage vehicles still support future sales. Valuation remains discounted, reflecting market concern over near-term unit volume deceleration and shifts in auto insurance behavior.

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 margin collapse in the last 12 months.
• Modest Valuation: Despite encouraging fundamentals, CPRT stock trades at a PE multiple of 22.9

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. Lululemon Athletica (LULU)

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

Smart Investing Begins With Portfolios

Individual stocks can soar or tank but one thing matters: staying invested. The right portfolio can help you stay invested, capture upside and mitigate the downside associated with any individual stock.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, 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. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.