CPRT Stock Risk & Deep Value Analysis
Copart Inc
DVR Score
out of 10
What You Need to Know About CPRT Stock
We analyzed Copart Inc using our deep value framework. Sign in to see our full verdict and DVR Score.
We ran CPRT through our deep value framework — analyzing financial health, distress signals, competitive moat, and risk factors. Our risk assessment: Moderate. Here's what we found.
CPRT Risk Analysis & Red Flags
What Could Go Wrong
The biggest risk for Copart is sustained pricing pressure from its major insurance company clients, who could leverage their volume to demand lower fees. This could erode Copart's historically strong Q3 FY2026 gross margin of 46.3% and negatively impact its profitability, even with stable revenue.
Risk Matrix
Overall
Moderate
Financial
Low
Market
Medium
Competitive
Medium
Execution
Low
Regulatory
Low
Red Flags
- ⚠
Net insider selling of $0.9 million over the last 3 months, with no reported buying, indicates a lack of insider conviction at current prices.
- ⚠
YoY revenue growth has slowed to +2.1% in Q3 FY2026, with 9-month YTD revenue declining -0.2% YoY, indicating limited organic growth drivers.
- ⚠
Analyst price targets suggest moderate upside (~50% to high target) but no multi-bagger potential for a 3-5 year horizon.
Upcoming Risk Events
- 📅
Q4 FY2026 Earnings Miss (expected September 9, 2026): A significant miss on revenue or EPS estimates, particularly if accompanied by weak guidance, could lead to a near-term price decline of 5-10%.
- 📅
Increased pricing pressure from major insurance partners (ongoing): Any renegotiation of service fees with large clients could compress Copart's robust gross margin (Q3 FY2026 46.3%) by 1-2%.
When to Reconsider
- 🚪
Exit if YoY revenue growth consistently falls into negative territory for two consecutive quarters, signaling market share loss or a significant industry downturn.
- 🚪
Sell if gross margin falls below 40% for two consecutive quarters, indicating substantial pricing pressure or operational inefficiency.
- 🚪
Exit if current P/E ratio climbs above 25x without a material acceleration in long-term earnings growth projections, suggesting overvaluation for a mature company.
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Investment Thesis
If Copart continues to leverage its efficient scale and established global footprint in online vehicle auctions, its highly profitable business model (32.5% net margin in Q3 FY2026) could generate consistent free cash flow (estimated $800M-$1.0B TTM FCF from training data) and return capital via buybacks. This is bullish because the company acts as a defensive, cash-generative incumbent, capable of steady share appreciation rather than exponential growth, and its current valuation of ~19x P/E is reasonable for such a high-quality business.
Is CPRT Stock Undervalued?
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CPRT Price Targets & Strategy
12-Month Target
$45.00
Bull Case
$65.00
Bear Case
$32.00
Valuation Basis
Based on ~21x forward P/E (aligned with industry average) applied to an estimated FY2027 EPS of $2.14.
Entry Strategy
Consider dollar-cost averaging on dips towards the $30-$32 range, which aligns with recent support levels and the lowest analyst target. Current price ($30.35) is near entry if sentiment shifts.
Exit Strategy
Take profit at $45.00 (consensus target) and reassess. Implement a stop-loss order if the stock breaks below $28.00.
Portfolio Allocation
2-4% for a moderate-conservative risk tolerance due to its stable, defensive nature rather than high growth.
Price Targets & Strategy
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Is CPRT Financially Healthy?
Valuation
P/E Ratio
18.29
Forward P/E
20.67
EV/EBITDA
31.30
PEG Ratio
6.30
Price/Book
3.78
Price/Sales
7.15
Profitability
Gross Margin
45.53%
Operating Margin
36.57%
Net Margin
33.48%
Return on Equity
16.63%
Revenue Growth
1.05%
EPS
$1.61
Balance Sheet
Current Ratio
8.42
Quick Ratio
8.30
Debt/Equity
0.00
Cash & Equivalents
$4.30B
Cash Flow
Operating Cash Flow
$842.36M
Free Cash Flow
$640.00M
EBITDA
$1.96B
Other
Beta (Volatility)
1.01
Does CPRT Have a Competitive Moat?
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🏰 Wide
Moat Trend
Stable
Moat Sources
3 Identified
Copart's moat is durable due to the high capital investment required to establish a global network of salvage yards and logistics, combined with the strong network effects of its online auction platform which makes it the preferred marketplace for both sellers (insurance companies) and buyers.
Moat Erosion Risks
- •Technological disruption from new entrants offering significantly cheaper or more efficient digital-only solutions (though challenging for a physical asset-heavy business).
- •Aggressive pricing strategies by competitors like IAA, potentially forcing Copart to lower its fees and erode margins.
CPRT Competitive Moat Analysis
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CPRT Market Intelligence
Sentiment & Insider Activity
Social Sentiment
Neutral - The provided research does not indicate significant retail buzz or strong directional sentiment.
Institutional Sentiment
Neutral - Consensus is 'Moderate Buy / Hold-range', with recent mixed analyst actions including an upgrade by Zacks (Strong Sell → Hold) but target cuts by JPMorgan and Barclays.
Insider Activity (Form 4)
Insiders sold $0.9 million over the last 3 months, with no reported insider buying in that period.
Options Flow
Normal options activity - No specific data on unusual options flow was provided in the research.
Earnings Intelligence
Next Earnings
2026-09-09 (Estimated for Q4 FY2026)
Surprise Probability
Medium - Copart has beaten EPS estimates in 3 of the last 4 quarters, but only topped revenue estimates once in the last 4 quarters, suggesting EPS beats often come from cost management rather than top-line surprises.
Historical Earnings Pattern
Historically, Copart's stock price reaction to earnings has been relatively stable, with modest movements on beats or misses, reflecting its mature company status. Extreme volatility is not typical.
Key Metrics to Watch
Competitive Position
Top Competitor
IAA (now part of Ritchie Bros.)
Market Share Trend
Stable - Copart maintains a leading position in the online vehicle auction and remarketing services, leveraging its established network.
Valuation vs Peers
Copart's trailing P/E of 19.17x is below the industry P/E of 21.3x and a peer average of 34.8x (per one source), suggesting it is reasonably valued or slightly undervalued relative to some peers, but not indicative of a significant growth discount.
Competitive Advantages
- •Network Effects: A large base of buyers and sellers attracts more participants, reinforcing its market dominance.
- •Efficient Scale: Extensive physical infrastructure (yards) and digital platform are costly and time-consuming for competitors to replicate.
- •Data Analytics: Proprietary data and analytics optimize pricing and operations, enhancing profitability.
Market Intelligence
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What Could Drive CPRT Stock Higher?
Near-Term (0-6 months)
- •Q4 FY2026 Earnings Report (expected September 9, 2026): A significant beat on revenue estimates (currently $1.15B) alongside strong forward guidance could provide a modest re-rating.
- •Continued share repurchase program (announced in prior periods): Sustained buybacks, particularly at current valuations, can support EPS and shareholder value, as seen in previous quarters.
Medium-Term (6-18 months)
- •Geographic Expansion (e.g., increased penetration in key European or Latin American markets over the next 12-18 months): Successful market entry or expansion in new regions could add 2-3% to annual revenue growth.
- •Increased adoption of online auction models globally (ongoing): As more regions or traditional sellers shift to digital platforms, Copart's established infrastructure could capture additional market share and incremental revenue.
Long-Term (18+ months)
- •AI-driven operational efficiency and pricing optimization (next 3-5 years): Further integration of AI to streamline logistics, optimize auction pricing, and enhance vehicle processing could incrementally improve gross and operating margins by 1-2 percentage points.
- •Industry consolidation leading to larger market share (next 3-5 years): Strategic acquisitions or organic growth capturing smaller regional players could expand Copart's market dominance and operational leverage, potentially adding $100M-$200M in annual revenue.
Catalysts & Growth Drivers
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What's the Bull Case for CPRT?
- ✓
Watch for acceleration in YoY revenue growth (above 5% annually), indicating successful market share gains or new market penetration.
- ✓
Monitor gross margin for sustained dips below 45%, signaling significant pricing pressure or cost inefficiencies.
- ✓
Observe free cash flow (FCF) generation; any material decline could impact capital allocation strategies.
Bull Case Analysis
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How Copart Inc Makes Money
Copart Inc. operates online auctions for salvage, damaged, and clear-title vehicles across the globe. It primarily serves insurance companies, providing a comprehensive service that includes vehicle inspection, processing, storage in its vast network of physical yards, and selling through its patented online bidding platform. Copart makes money by charging commissions and fees to both sellers and buyers for these services, effectively acting as an intermediary that facilitates the remarketing of vehicles.
Read Full Business Model BreakdownFAQ
What is the DVR Score for Copart Inc (CPRT)?
As of June 4, 2026, Copart Inc has a DVR Score of 2.7 out of 10, placing it in the "Risk Trap" category. This score is generated by our AI-powered deep value analysis framework that evaluates growth potential, financial health, competitive moat, and risk factors.
What is the market capitalization of Copart Inc?
Copart Inc's market capitalization is approximately $28.4B..
What is the risk level for CPRT stock?
Our analysis rates Copart Inc's overall risk as Moderate. This assessment considers execution risk, market risk, financial risk, competitive risk, and regulatory risk. For a full breakdown, see the risk analysis section above.
What is the P/E ratio of CPRT?
Copart Inc currently has a price-to-earnings (P/E) ratio of 18.3. This is in line with broader market averages.
Is Copart Inc's revenue growing?
Copart Inc has reported revenue growth of 1.1%. The company is growing at a moderate pace.
Is CPRT stock profitable?
Copart Inc has a profit margin of 33.5%. This indicates strong profitability.
How often is the CPRT DVR analysis updated?
Our AI-powered analysis of Copart Inc is refreshed regularly to incorporate the latest financial data, market conditions, and news. The most recent update was on June 4, 2026.
Important Disclaimer – Not Financial Advice
Deep Value Reports is an independent research platform for educational and informational purposes only. We are not financial advisors, investment advisors, or licensed professionals. The analysis, scores, and information provided on this page for CPRT (Copart Inc) should not be construed as personalized investment advice, a recommendation to buy or sell any security, or an offer to provide investment advisory services.
All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results. Always conduct your own research, consider your financial situation, and consult with a qualified financial advisor before making any investment decisions.