CPRT Copart
An exceptional salvage network remains expensive as growth normalizes and margins compress.
The story
Copart operates a capital-intensive salvage-auction network whose dense buyer, seller, land, and logistics ecosystem creates formidable scale and switching advantages. The franchise remains durable, but revenue growth has normalized near 9% and operating margins are steadily retreating as capacity and service costs rise. It is transitioning from exceptional growth toward mature compounder economics.
The prior drivers remain supported: roughly 10% historical growth justifies 9% near-term growth, while persistent margin compression supports convergence to 34%. Copart's moat warrants a 10-year horizon, but land and capacity requirements keep sales-to-capital at 0.5.
Value drivers
| Revenue growth (Y1) | 9.0% |
| Terminal growth | 3.0% |
| Forecast horizon | 10y |
| Target operating margin | 34.0% |
| Years to target margin | 7 |
| Sales-to-capital | 0.50 |
| Beta | 1.05 |
| Failure probability | 1.0% |
| Cost of capital (WACC) | 9.3% |
| Terminal WACC | 9.1% |
Valuation bridge
| PV of explicit FCFF | 6.99B |
| PV of terminal value | 12.87B |
| Equity value | 22.40B |
| ÷ shares → per share | $23.26 |
News
bearish -0.30 · 8 articles
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- Why Copart Stock Stumbled Today
- Stock Market Today, June 29: Nasdaq Composite Outperforms as Tech Stocks Gain on Easing Geopolitical Tensions
- US Equity Markets End Higher Amid Pause in US-Iran Hostilities
- Here’s Why Renaissance Investment Management Sold Copart (CPRT)
Projected free cash flow to the firm
| Yr | Revenue | Growth | Margin | NOPAT | Reinvest | FCFF | PV |
|---|---|---|---|---|---|---|---|
| 1 | 5.06B | 9.0% | 36.2% | 1.50B | 835.00M | 660.13M | 603.99M |
| 2 | 5.48B | 8.3% | 35.8% | 1.60B | 842.73M | 760.58M | 636.73M |
| 3 | 5.90B | 7.7% | 35.5% | 1.71B | 839.92M | 868.65M | 665.36M |
| 4 | 6.31B | 7.0% | 35.1% | 1.81B | 825.68M | 983.59M | 689.33M |
| 5 | 6.71B | 6.3% | 34.7% | 1.90B | 799.33M | 1.10B | 708.20M |
| 6 | 7.09B | 5.7% | 34.4% | 1.99B | 760.49M | 1.23B | 721.60M |
| 7 | 7.44B | 5.0% | 34.0% | 2.07B | 709.04M | 1.36B | 729.31M |
| 8 | 7.77B | 4.3% | 34.0% | 2.16B | 645.23M | 1.51B | 742.64M |
| 9 | 8.05B | 3.7% | 34.0% | 2.24B | 569.62M | 1.67B | 749.01M |
| 10 | 8.29B | 3.0% | 34.0% | 2.30B | 483.14M | 1.82B | 748.47M |
Key risks
- Further margin erosion from land, labor, and logistics costs
- Slower salvage volumes or weaker used-vehicle pricing
- Valuation assumes sustained growth despite maturing operations
Catalysts
- Volume growth from rising vehicle complexity and total-loss frequency
- International network expansion with improving utilization