Jim Cramer on Copart: “Too Soon to Stick Your Neck Out”

Company Overview - Copart, Inc. (NASDAQ:CPRT) operates an online vehicle auction and remarketing platform, primarily serving insurance companies, banks, and rental car companies to process and sell salvaged vehicles through digital auction tools [2]. Market Performance - Copart was highlighted as the fourth worst-performing stock in the Nasdaq-100, experiencing a decline of approximately 32% last year due to losing market share [1]. - The stock is currently trading at over 23 times this year's earnings estimates, indicating it is not considered a bargain at this time [1]. Competitive Landscape - The online auction sector for vehicles is characterized as a duopoly, with Copart being the larger and better-managed player compared to its main competitor, IAA, which has become more aggressive in pricing after being acquired by RB Global [2]. - A national insurance carrier has switched to IAA, further impacting Copart's market share [2]. Financial Performance - Copart's revenue and earnings growth have decelerated to just below 10% in the past 12 months, attributed to a spike in auto insurance leading to an increase in uninsured and under-insured motorists, which has reduced volumes through Copart's insurance vertical that accounts for 80% of its revenues [2]. Investment Decisions - Qualivian Investment Partners sold their position in Copart and initiated a new position in Brookfield Corp, citing the less rational competition and weakening fundamental backdrop as reasons for exiting [2].