CPRT$28.78

Copart shows strong multi-year expansion, with revenue rising from 2.7bn to 4.6bn and net income from 0.9bn to 1.6bn, though growth has clearly decelerated from the early post-2021 surge into a more mature high-single-digit pace. TTM revenue is essentially flat versus FY25, while net income is only marginally higher, suggesting stabilization rather than reacceleration. Gross and operating margins remain excellent by sector standards, but both have drifted lower over time as SG&A has climbed faster than sales. Earnings are durable, with free cash flow steadily improving and no major one-off distortions beyond the meaningful boost from rising interest income and other non-operating gains. Assuming an auto auction/remarketing model, profitability remains top-tier, though expense pressure is a watchpoint.

Copart’s balance sheet is exceptionally strong. Total current assets rose from $1.7 billion in FY2021 to $5.8 billion in FY2025, while total current liabilities increased far more slowly to $683 million, leaving ample working capital. Cash and short-term investments expanded to $4.8 billion in FY2025, and even on a TTM basis remain very high at $4.2 billion, comfortably covering all current obligations. Total liabilities are modest at $883 million versus $10.1 billion of assets, and debt has been nearly eliminated, falling to $104 million in FY2025 and $93 million TTM. Shareholders’ equity climbed steadily to $9.2 billion, supported by retained earnings growth. Overall, leverage is minimal, liquidity is robust, and there are no major balance sheet red flags.

Copart shows strong and improving cash generation, with operating cash flow rising from $990.9 million in FY2021 to $1.8 billion in FY2025, while TTM CFO remained high at $1.685 billion. Free cash flow has also compounded well, from $527.9 million to $1.231 billion, and TTM FCF reached $1.339 billion, supported by disciplined capital spending that stayed near $463 million to $569 million annually. The FCF margin improved from 19.6% to 26.5%, indicating efficient conversion of earnings into cash. Working capital movements are meaningful, especially receivables, but they have not broken the overall trend. Capital allocation looks conservative on debt and active on share repurchases, with TTM buybacks of $1.633 billion, which appears consistent with strong internal cash generation.

Copart shows very strong short-term liquidity, with current and quick ratios rising steadily over most of the period and still remaining well above comfortable levels, though both eased in the latest reading. Leverage is conservative: debt-to-equity, debt-to-EBITDA, and debt-to-FCF all stayed very low, while net debt remained negative, indicating a solid net cash position. Efficiency is mixed, as inventory turnover improved meaningfully, but asset turnover trended lower, suggesting each dollar of assets is generating less revenue over time. Profitability remains good but has softened, with ROE, ROA, and ROCE all declining from earlier highs. ROIC stayed relatively robust, but the overall return profile is weaker than before.

Copart’s growth profile has shifted from a very strong expansion phase to a more moderate, steadier pace. Revenue rose sharply in FY2021 and FY2022, then growth cooled into the low-double-digit and high-single-digit range before flattening in FY2026 and re-accelerating only modestly in FY2027. EPS growth appears more stable than revenue in the forward period, with gains in FY2025 and FY2027 suggesting some margin support, though not enough to imply a strong earnings breakout. The forward P/E in the high teens looks broadly consistent with this slower but still positive outlook. Analyst sentiment is constructive, with a Buy consensus, 12-analyst coverage, and a stable recommendation mix across recent months, indicating steady but not rising conviction.