Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The goal is to generate long-term free cash flow and create shareholder value through fundamental research in sectors with strong secular tailwinds [1] Investment Philosophy - The investor is self-educated and has been active in the investment field for 10 years, currently managing personal funds sourced from friends and family [1] - The motivation for sharing insights on platforms like Seeking Alpha is to provide valuable analysis and receive feedback from other investors [1] - The focus is on helping readers understand the drivers of long-term equity value and ensuring that analysis is both analytical and accessible [1]

Core Insights - The investment approach focuses on identifying businesses with potential for long-term growth and significant terminal value generation [1] - Emphasis is placed on understanding core business economics, including competitive advantages, unit economics, reinvestment opportunities, and management quality [1] - The analyst aims to provide accessible and analytical insights to help investors focus on long-term equity value drivers [1] Investment Strategy - The investment strategy is fundamentally driven, concentrating on sectors with strong secular growth trends [1] - The analyst has a decade of self-education in investing and currently manages personal funds sourced from friends and family [1] - The goal of sharing insights on platforms like Seeking Alpha is to engage with fellow investors and enhance the quality of investment analysis [1]

Core Viewpoint - Copart's stock has declined despite better-than-expected earnings, indicating potential investor disappointment with sales figures [1][4]. Financial Performance - Analysts had forecasted Copart to earn $0.36 per share on $1.14 billion in sales, but the company reported earnings of $0.41 per share with sales of $1.13 billion [2]. - For the fiscal fourth quarter, Copart achieved a 5% year-over-year sales growth and a 24% increase in profits [4]. - Total sales growth for the full year approached 10%, but the Q4 growth rate slowed to half of that [5]. - Full-year earnings were reported at $1.59 per share, reflecting a 14% growth compared to fiscal 2024 [5]. Valuation and Investment Outlook - Copart's stock is currently priced at 33 times earnings, which is considered high given the annual growth rate of 14% [6]. - The company's free cash flow stands at $1.2 billion, approximately 20% less than reported earnings, leading to a valuation closer to a 40x multiple based on free cash flow [6][7]. - Analysts predict a long-term growth rate closer to 13%, suggesting that the current stock price may be too high [7].

Core Insights - Copart, Inc. (CPRT) reported adjusted earnings per share of 41 cents for Q4 fiscal 2025, exceeding the Zacks Consensus Estimate of 37 cents, with a year-over-year increase of 24.24% [1][9] - The company generated revenues of $1.13 billion, slightly missing the Zacks Consensus Estimate of $1.15 billion, but reflecting a 5.25% increase from the previous year [1] Revenue Breakdown - Service revenues for the fourth quarter were $956.2 million, up from $893.1 million in the same period last year, but below the Zacks Consensus Estimate of $969 million, accounting for 84.98% of total revenues [2] - Vehicle sales totaled $168.89 million, a decline from $175.91 million in the prior-year quarter and below the Zacks Consensus Estimate of $178 million [2] Industry Context - Global insurance volumes decreased by approximately 2% year over year in Q4 fiscal 2025, while total loss frequency in the U.S. rose to 22.2% from 21.5% in the previous year, indicating a trend that may benefit Copart due to increased salvage vehicles [3] Cost and Profit Analysis - Yard operations expenses increased by 2.8% year over year to $418.5 million, while the cost of vehicle sales decreased by 9% to $147.4 million [4] - Gross profit rose by 12.4% year over year to $509.72 million, with total operating expenses increasing by 0.4% to $712.5 million [4] Income and Cash Position - Operating income increased to $412.6 million from $359.5 million in the prior year, with net income growing by 22.7% year over year to $395.31 million [5] - As of July 31, 2025, Copart had cash, cash equivalents, and restricted cash totaling $2.78 billion, up from $1.51 billion a year earlier [5]

Core Insights - Copart Inc. is a leading online vehicle auction provider, focusing on the resale and remarketing of vehicles through a technology-driven platform [1] Financial Performance - For the quarter ending September 4, 2025, Copart reported an EPS of $0.41, exceeding the estimated $0.36 and the Zacks Consensus Estimate of $0.37, marking a +10.81% earnings surprise [2][6] - The company generated $1.13 billion in revenue, slightly missing the estimated $1.14 billion, but showing growth from $1.07 billion in the same quarter last year [3][6] - Over the past four quarters, Copart has surpassed consensus revenue estimates twice, indicating a consistent upward trend in revenue generation [3] Financial Health - Copart maintains a low debt-to-equity ratio of 0.012, ensuring financial stability with minimal debt relative to its equity [4][6] - The current ratio of 8.16 highlights the company's strong ability to cover short-term liabilities with its short-term assets [4] Valuation Metrics - The company has a P/E ratio of 32.65 and a price-to-sales ratio of 10.52, reflecting a positive market outlook on its earnings and revenue potential [5] - The enterprise value to sales ratio is 10.03, and the enterprise value to operating cash flow ratio is 25.58, emphasizing the company's strong market position and efficient cash flow management [5]

Core Insights - Copart, Inc. reported quarterly earnings of $0.41 per share, exceeding the Zacks Consensus Estimate of $0.37 per share, and up from $0.33 per share a year ago, representing an earnings surprise of +10.81% [1] - The company posted revenues of $1.13 billion for the quarter ended July 2025, which missed the Zacks Consensus Estimate by 1.85%, but was an increase from $1.07 billion year-over-year [2] - Copart shares have underperformed the market, losing about 16.2% since the beginning of the year compared to the S&P 500's gain of 9.6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.42 on revenues of $1.24 billion, and for the current fiscal year, it is $1.73 on revenues of $5.06 billion [7] - The estimate revisions trend for Copart was mixed ahead of the earnings release, resulting in a Zacks Rank 3 (Hold) for the stock, indicating expected performance in line with the market [6] Industry Context - The Auction and Valuation Services industry, to which Copart belongs, is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook as the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [8]

Financial Data and Key Metrics Changes - For fiscal year 2025, global revenue increased to $4.65 billion, reflecting a growth of 9.7% compared to the previous year [17] - Global service revenue increased by approximately $407.7 million, or 11.4% for the full fiscal year [18] - Fourth quarter GAAP net income attributable to Copart, Inc. increased by 22.9% to $396.4 million, or $0.41 per diluted common share [23] Business Line Data and Key Metrics Changes - Global unit sales increased by 4.8% for fiscal year 2025 but declined by 0.9% in the fourth quarter [13] - U.S. insurance volume grew by 4.2% for fiscal year 2025 but decreased by approximately 2% in the fourth quarter [14] - Non-insurance unit volume increased by 2.8% for fiscal year 2025 but decreased by 2.1% in the fourth quarter [14] Market Data and Key Metrics Changes - International segment units sold grew by 8.1% for fiscal year 2025 and by 3.3% for the fourth quarter [15] - Global average selling prices (ASPs) increased by 5.6% in the fourth quarter and 2.4% for the full year [16] - Global inventory decreased by 13.1% year over year, with U.S. inventory levels decreasing by 14.8% [16] Company Strategy and Development Direction - The company emphasizes the importance of auction liquidity as a competitive advantage, aiming to enhance service to insurance clients and drive selling prices [10][39] - Investments are being made in technology, including AI, to improve operational efficiency and decision-making processes [29] - The company is focused on expanding its market presence by enhancing service offerings to both insurance and non-insurance clients [39] Management's Comments on Operating Environment and Future Outlook - Management noted a cyclical disconnect between accident activity and insurance claims frequency, indicating a potential impact on future insurance volumes [5][6] - The company anticipates continued growth in auction liquidity and service offerings, which are expected to drive future performance [39] - Management expressed cautious optimism regarding the insurance market, noting potential competitive responses from carriers as profitability improves [68][69] Other Important Information - The company reported a significant increase in liquidity, with $6 billion available, including $4.8 billion in cash and securities [23] - Facility-related costs increased by 13.7% for the full fiscal year, reflecting ongoing investments in operational capacity [20][21] Q&A Session Summary Question: Discussion on AI and technology advancements - Management highlighted the deployment of AI in decision support tools, enhancing efficiency and service delivery [28][29] Question: Total loss frequency of electric vehicles (EVs) - Management noted that EVs tend to be totaled more easily due to advanced technology, which may impact future total loss frequency [32][33] Question: Key operational milestones for the new fiscal year - Management emphasized the importance of auction liquidity and service to insurance clients as key operational focuses [39] Question: Cash levels and capital returns - Management indicated a long-term strategy of returning cash to shareholders through buybacks and is always exploring M&A opportunities [42] Question: Decline in assignments - Management clarified that the assignment decline was low single digits, not double digits [50] Question: ASP growth compared to peers - Management confirmed that Copart's ASP growth significantly outpaced that of similar service providers [52] Question: Impact of autonomous vehicles on crash rates - Management stated that current data on autonomous vehicles is limited, and their impact on auction activity is minimal at this time [58] Question: Insurance market dynamics - Management acknowledged that competitive behaviors among insurance carriers are expected to evolve as profitability improves [68][69] Question: Market structure and share growth opportunities - Management discussed the expansive view of opportunities in the salvage auction industry, emphasizing the importance of delivering excellent auction returns [73] Question: Strategy behind auction platform changes - Management explained that the strategy focuses on matching the right buyers to the right products to enhance auction returns [76]

Financial Data and Key Metrics Changes - For fiscal year 2025, global revenue increased to $4.65 billion, reflecting a growth of 9.7% compared to the previous year [17] - Global gross profit for the quarter was $509.7 million, an increase of 12.4%, with a gross margin percentage of 45.3% [20] - GAAP net income attributable to Copart, Inc. increased by 22.9% to $396.4 million for the quarter, and for the fiscal year, it increased by 13.9% to $1.55 billion [22] Business Line Data and Key Metrics Changes - Global unit sales increased by 4.8% for fiscal year 2025, but declined by 0.9% in the 4th quarter [12] - U.S. insurance volume grew by 4.2% for fiscal year 2025 but decreased by approximately 2% in the 4th quarter [13] - Non-insurance unit volume increased by 2.8% for fiscal year 2025 but decreased by 2.1% in the 4th quarter, with a significant decline in the Cash for Cars business line [13][14] Market Data and Key Metrics Changes - International segment units sold grew by 8.1% for fiscal year 2025 and by 3.3% in the 4th quarter [14] - Global average selling prices (ASPs) increased by 5.6% in the 4th quarter and 2.4% for the full year [16] - The U.S. total loss frequency for the second calendar quarter of 2025 was 22.2%, up from 21.5% in the same quarter in 2024 [6] Company Strategy and Development Direction - The company emphasizes the importance of auction liquidity as a competitive advantage, focusing on enhancing member experience and reducing friction in the auction process [36] - Continued investment in technology, including AI, is aimed at improving operational efficiency and decision-making processes [27][28] - The company is exploring opportunities for M&A that enhance its service proposition while maintaining a long-term focus on returning cash to shareholders [40] Management's Comments on Operating Environment and Future Outlook - Management noted a cyclical disconnect between accident activity and insurance claims frequency, with a general decline in accident rates but an increase in total loss frequency [5][6] - The company anticipates continued competitive dynamics in the insurance industry, with potential price competition as combined ratios improve [67][68] - Management expressed confidence in the long-term growth opportunities within the salvage auction industry, particularly by enhancing auction returns and service quality [73] Other Important Information - The company reported a global inventory decrease of 13.1% year-over-year, driven by faster cycle times and reduced aged inventory [16] - Facility-related costs increased by 3.2% in the 4th quarter, reflecting ongoing investments in operational capacity [20] Q&A Session Summary Question: Impact of AI and Technology on the Industry - Management discussed the deployment of AI for decision support and operational efficiency, noting that it enhances service delivery and reduces cycle times [27][28] Question: Total Loss Frequency of EVs - Management indicated that EVs tend to be totaled more easily due to advanced technology, which may impact total loss frequency positively [32] Question: Key Operational Milestones for the New Fiscal Year - Management highlighted auction liquidity and service to insurance clients as key operational focuses for the upcoming year [36] Question: Cash Levels and Capital Returns - Management confirmed a long-term strategy of returning cash to shareholders through buybacks and is open to M&A opportunities that enhance service offerings [40] Question: Current Market Structure and Share Growth Opportunities - Management emphasized the expansive view of opportunities in the salvage auction industry, focusing on delivering excellent auction returns and service [73]

[Financial Results Overview](index=1&type=section&id=Financial%20Results%20Overview) [Fourth Quarter Fiscal 2025 Financial Results](index=1&type=section&id=Fourth%20Quarter%20Fiscal%202025%20Financial%20Results) Copart reported strong fourth quarter fiscal 2025 results, demonstrating significant year-over-year growth in revenue, gross profit, net income, and diluted earnings per share Q4 FY2025 Financial Performance (YoY Change) | Metric | Q4 FY2025 (Millions) | Q4 FY2024 (Millions) | % Change | | :--------------------------------- | :------------------- | :------------------- | :------- | | Revenue | $1,100 | $1,043.9 | 5.2% | | Gross Profit | $510 | $453.9 | 12.4% | | Net Income Attributable to Copart, Inc. | $396 | $322.2 | 22.9% | | Fully Diluted EPS | $0.41 | $0.33 | 24.2% | - Revenue increased by **$56.1 million**, or **5.2%**, compared to the same period last year[4](index=4&type=chunk) - Net income attributable to Copart, Inc. increased by **$73.8 million**, or **22.9%**, year-over-year[4](index=4&type=chunk) [Full Year Fiscal 2025 Financial Results](index=1&type=section&id=Full%20Year%20Fiscal%202025%20Financial%20Results) For the full fiscal year ended July 31, 2025, Copart achieved substantial growth across its key financial indicators, including revenue, gross profit, net income, and diluted earnings per share Full Year FY2025 Financial Performance (YoY Change) | Metric | FY2025 (Millions) | FY2024 (Millions) | % Change | | :--------------------------------- | :---------------- | :---------------- | :------- | | Revenue | $4,600 | $4,189.9 | 9.7% | | Gross Profit | $2,100 | $1,907.6 | 10.1% | | Net Income Attributable to Copart, Inc. | $1,600 | $1,410.6 | 13.9% | | Fully Diluted EPS | $1.59 | $1.40 | 13.6% | - Revenue for the year increased by **$410.1 million**, or **9.7%**, from the prior year[5](index=5&type=chunk) - Net income attributable to Copart, Inc. increased by **$189.4 million**, or **13.9%**, compared to the previous fiscal year[5](index=5&type=chunk) [Company Overview](index=1&type=section&id=About%20Copart) Copart, Inc. is a global leader in online vehicle auctions, leveraging innovative technology to connect consignors with a vast international buyer network - Copart, Inc., founded in 1982, is a **global leader in online vehicle auctions**[7](index=7&type=chunk) - The company's innovative technology and online auction platforms connect vehicle consignors to approximately **1 million members** in over **185 countries**[7](index=7&type=chunk) - Copart offers a comprehensive suite of vehicle remarketing services to various clients, including insurance companies, financial institutions, dealers, rental car companies, charities, fleet operators, and individuals[7](index=7&type=chunk) - With operations at over **250 locations** in **11 countries**, Copart sold more than **4 million units** in the last year[7](index=7&type=chunk) [Conference Call Information](index=1&type=section&id=Conference%20Call) Copart will host a conference call on September 4, 2025, to discuss quarterly results, accessible via live webcast and replay - Copart will conduct a conference call on **Thursday, September 4, 2025, at 5:30 p.m. Eastern Time** to discuss the quarterly results[6](index=6&type=chunk) - The call will be webcast live and accessible at **www.copart.com/investorrelations**, with a replay available through **November 2025**[6](index=6&type=chunk) [Cautionary Note About Forward-Looking Statements](index=2&type=section&id=Cautionary%20Note%20About%20Forward-Looking%20Statements) This section advises investors that the press release contains forward-looking statements subject to risks and uncertainties, recommending review of SEC filings - This press release contains forward-looking statements subject to substantial risks and uncertainties, as defined by federal securities laws[10](index=10&type=chunk) - Investors are encouraged to review Copart's latest Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K for a complete discussion of risks that could affect the business[10](index=10&type=chunk) - The company does not undertake to update any forward-looking statements[10](index=10&type=chunk) [Consolidated Financial Statements](index=3&type=section&id=Consolidated%20Financial%20Statements) [Consolidated Statements of Income](index=3&type=section&id=Consolidated%20Statements%20of%20Income) The Consolidated Statements of Income reflect strong financial performance for both the three and twelve months ended July 31, 2025, with notable increases in service revenues, gross profit, operating income, and net income attributable to Copart, Inc Consolidated Statements of Income (Three Months Ended July 31, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--------------------------------- | :------------------ | :------------------ | :------- | | Service revenues | $956,209 | $893,091 | 7.1 % | | Total service revenues and vehicle sales | $1,125,097 | $1,068,999 | 5.2 % | | Gross profit | $509,718 | $453,576 | 12.4 % | | Operating income | $412,591 | $359,544 | 14.8 % | | Net income attributable to Copart, Inc. | $396,354 | $322,567 | 22.9 % | | Diluted net income per common share | $0.41 | $0.33 | 24.2 % | Consolidated Statements of Income (Twelve Months Ended July 31, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--------------------------------- | :------------------ | :------------------ | :------- | | Service revenues | $3,968,662 | $3,561,002 | 11.4 % | | Total service revenues and vehicle sales | $4,646,958 | $4,236,823 | 9.7 % | | Gross profit | $2,099,643 | $1,907,252 | 10.1 % | | Operating income | $1,696,714 | $1,572,023 | 7.9 % | | Net income attributable to Copart, Inc. | $1,552,449 | $1,363,020 | 13.9 % | | Diluted net income per common share | $1.59 | $1.40 | 13.6 % | - Total operating expenses for the twelve months ended July 31, 2025, increased by **10.7%** to **$2,950,244 thousand**[13](index=13&type=chunk) [Consolidated Balance Sheets](index=4&type=section&id=Consolidated%20Balance%20Sheets) Copart's Consolidated Balance Sheets as of July 31, 2025, show a significant increase in total assets, primarily driven by a substantial rise in cash and cash equivalents, alongside a healthy growth in stockholders' equity Consolidated Balance Sheets Highlights (As of July 31, 2025 vs. 2024) | Metric | July 31, 2025 (in thousands) | July 31, 2024 (in thousands) | | :--------------------------------- | :--------------------------- | :--------------------------- | | Total assets | $10,090,902 | $8,427,764 | | Cash, cash equivalents, and restricted cash | $2,780,531 | $1,514,111 | | Property and equipment, net | $3,598,093 | $3,175,838 | | Total liabilities | $883,411 | $879,209 | | Total stockholders' equity | $9,187,033 | $7,524,011 | - Cash, cash equivalents, and restricted cash increased by **$1,266,420 thousand** (**83.6%**) year-over-year[15](index=15&type=chunk) - Total assets grew by **$1,663,138 thousand** (**19.7%**) from the previous fiscal year-end[15](index=15&type=chunk) [Consolidated Statements of Cash Flows](index=5&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The Consolidated Statements of Cash Flows indicate robust cash generation from operating activities in fiscal year 2025, contributing to a significant net increase in cash and cash equivalents, despite substantial investments in property and equipment and held-to-maturity securities Consolidated Statements of Cash Flows (Year Ended July 31, 2025 vs. 2024) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--------------------------------- | :------------------ | :------------------ | | Net cash provided by operating activities | $1,799,750 | $1,472,564 | | Net cash used in investing activities | $(587,448) | $(940,079) | | Net cash provided by financing activities | $52,107 | $19,273 | | Net increase in cash, cash equivalents, and restricted cash | $1,266,420 | $556,716 | | Cash, cash equivalents, and restricted cash at end of period | $2,780,531 | $1,514,111 | - Net cash provided by operating activities increased by **$327,186 thousand** (**22.2%**) year-over-year[18](index=18&type=chunk) - Purchases of property and equipment amounted to **$568,990 thousand** in FY2025, an increase from **$510,990 thousand** in FY2024[18](index=18&type=chunk)

Group 1: Stock Performance - Copart, Inc. (CPRT) stock increased by 2.68% to $48.96, outperforming the S&P 500's gain of 1.52% on the same day [1] - Over the past month, the stock has risen by 3.05%, contrasting with the Business Services sector's decline of 0.57% and the S&P 500's increase of 1.1% [1] Group 2: Earnings Projections - The upcoming earnings per share (EPS) for Copart, Inc. is projected at $0.37, indicating a 12.12% increase from the same quarter last year [2] - The Zacks Consensus Estimate for revenue is expected to be $1.15 billion, reflecting a 7.23% increase from the previous year [2] Group 3: Full Year Estimates - For the full year, earnings are projected at $1.56 per share, representing an 11.43% increase from the prior year [3] - Revenue for the full year is estimated to be $4.67 billion, showing no change from the previous year [3] Group 4: Analyst Estimates and Market Sentiment - Changes in analyst estimates for Copart, Inc. are crucial as they reflect short-term business trends and can indicate analysts' favorable outlook on the company's health and profitability [4] - Recent research indicates that estimate revisions correlate with near-term share price momentum, providing investors with actionable insights [5] Group 5: Zacks Rank and Valuation - Copart, Inc. currently holds a Zacks Rank of 3 (Hold), with the consensus EPS projection remaining unchanged over the past 30 days [6] - The company has a Forward P/E ratio of 27.61, which is lower than the industry average Forward P/E of 37.7, indicating a valuation discount [7] Group 6: Industry Context - The Auction and Valuation Services industry, part of the Business Services sector, has a Zacks Industry Rank of 210, placing it in the bottom 15% of over 250 industries [7] - The Zacks Industry Rank assesses the performance of industry groups, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [8]