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].

Group 1: Fund Performance - Qualivian Investment Partners outperformed the iShares MSCI USA Quality Factor ETF (QUAL) by 69.2% and 61.3% on a gross and net basis since inception through September 30, 2025 [1] - The fund exceeded the S&P 500 by 32.7% and 26.1% respectively, on a gross and net basis [1] Group 2: Copart, Inc. Overview - Copart, Inc. (NASDAQ:CPRT) is an online auction and vehicle remarketing services company with a one-month return of 0.77% and a 52-week loss of 33.41% [2] - As of December 22, 2025, Copart's stock closed at $39.36 per share, with a market capitalization of $38.1 billion [2] Group 3: Investment Strategy - Qualivian Investment Partners sold its position in Copart, Inc. and initiated a new position in Brookfield Corp. [3] - The online auctions sector is characterized as a duopoly, with Copart being the larger and better-managed player compared to IAA, which has become more aggressive in pricing due to its acquisition by RB Global [3] - The increase in uninsured and under-insured motorists has led to a deceleration in Copart's revenue and earnings growth to just below 10% in the past 12 months [3] Group 4: Hedge Fund Interest - Copart, Inc. was held by 59 hedge fund portfolios at the end of the third quarter, a decrease from 61 in the previous quarter [4] - There is a belief that certain AI stocks offer greater upside potential and carry less downside risk compared to Copart, Inc. [4]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 7% on a 2% increase in gross transactional value (GTV) [4][12] - Adjusted earnings per share rose by 14% due to higher operating income, lower net interest expense, and a lower adjusted tax rate [17] - Adjusted EBITDA as a percentage of GTV increased to 8.7% compared to 8.3% the prior year [17] Business Line Data and Key Metrics Changes - Automotive GTV increased by 8%, driven by a 9% increase in unit volumes, partially offset by a decline in the average price per vehicle sold [12][14] - Unit volume growth in the automotive sector was attributed to strong organic growth from existing partners and an increase in market share [12][13] - GTV in the commercial construction and transportation sector decreased by 6%, driven by an 18% decline in lot volumes, partially offset by an increase in average selling price [14][16] Market Data and Key Metrics Changes - U.S. Insurance average selling prices increased approximately 1% year over year [6][12] - The total loss ratio increased by nearly 70 basis points in the second quarter to approximately 22.2% compared to 21.5% in the same period last year [13] - The average price per lot sold in the commercial construction and transportation sector increased due to an improvement in asset mix [16] Company Strategy and Development Direction - The company announced a new joint venture in the UK with LKQ Corporation, enhancing its automotive parts and dismantling business [8][9] - The acquisition of J.M. Wood was highlighted as a strategic enhancement of the company's footprint in Alabama and the broader Southeast United States [10][11] - The company is focused on driving sustainable growth and enhancing operational efficiency through ongoing optimization of its territory manager network [11][19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding the second half of the year, noting macroeconomic uncertainties and a focus on potential mega projects [24][28] - The company is raising its adjusted EBITDA guidance range to $1.34 to $1.37 billion, reflecting confidence in its strategy and ability to drive sustainable long-term growth [19] - Management emphasized the importance of being prepared for potential business surges and maintaining operational excellence [7][28] Other Important Information - The company incurred a one-time loss on deconsolidation of $15.5 million related to the LKQ joint venture [18] - The company is investing in key technological initiatives and optimizing its sales force to improve customer experience [19] Q&A Session Summary Question: Insights on H2 performance and guidance - Management noted cautious optimism for H2, with a focus on macroeconomic factors and potential mega projects impacting guidance [21][24] Question: Update on CCNT side and customer behavior - Management indicated uncertainty in customer decisions regarding equipment, influenced by tariffs and interest rates [25][28] Question: Broader M&A pipeline and future acquisitions - Management highlighted ongoing opportunities in M&A that align with the company's core business and international expansion [31][32] Question: Competitive dynamics in North America - Management emphasized a focus on operational performance and transparency to maintain competitive advantage [40][41] Question: Impact of uninsured motorists on volume - Management stated that while it is a concern, there has not been a significant impact on business volume [45][46] Question: Tax law implications for construction activity - Management expressed optimism about potential construction activity due to recent tax law changes but emphasized the intrinsic value of the business [47][48] Question: GTV guidance and sustainability of improvements - Management acknowledged the impact of cat events on GTV guidance and expressed cautious optimism for continued improvement [51][54] Question: Update on RBFS and recurring revenue - Management indicated confidence in RBFS despite a different interest rate environment, focusing on growth opportunities [69][70]

Core Insights - LKQ Corporation has formed a joint venture with SYNETIQ Ltd. to enhance its vehicle recycled parts strategy in Europe [1][2] - The joint venture, named LKQ SYNETIQ, aims to leverage LKQ's distribution capabilities and SYNETIQ's dismantling and recycling expertise to meet future EU regulations [2][4] - The collaboration is expected to provide sustainable and affordable parts for automotive repair, particularly for hybrid and electric vehicles [4] Company Overview - LKQ Corporation is a leading provider of alternative and specialty parts for automobiles, with operations in North America, Europe, and Taiwan [5] - The company offers a wide range of OE recycled and aftermarket parts, components, and services for various types of vehicles [5] Joint Venture Details - LKQ SYNETIQ will combine LKQ's logistics network with SYNETIQ's dismantling capabilities, which include dismantling approximately 27,000 vehicles annually across four UK sites [2][3] - The joint venture will be led by key executives from both companies, including Michael Hill from SYNETIQ and Annick Jourdenais from LKQ Europe [3] Strategic Goals - The partnership aims to maximize the environmental and financial potential of vehicles while supporting the UK's salvage community [4] - LKQ plans to continue acquiring salvage vehicles and recycled parts from various sources to enhance availability for consumers [4]

Core Viewpoint - The article advocates for the investment strategy of "buying the dip" in established companies like Copart, which has a strong historical performance and is currently experiencing a temporary decline in stock price [1][3]. Company Overview - Copart operates the leading online auction platform for totaled vehicles and has been a significant performer since its IPO in 1994, achieving a 341-bagger return [2]. - The company processes over 3 million vehicle sales annually and holds a market share of approximately 45%, leading a duopoly with RB Global [4]. Business Model - Copart's primary transactions involve insurance companies selling totaled vehicles through its platform to various buyers, with 81% of its business coming from insurance sales in 2024 [5]. - The company provides a comprehensive range of services including towing, storage, inspections, and logistics, making it a one-stop shop for salvage vehicle transactions [6]. Competitive Advantage - Copart benefits from a wide moat due to the NIMBY sentiment, which makes it difficult for new competitors to establish salvage yards in most locations [7]. - The increasing complexity and cost of vehicle repairs are expected to favor Copart, as more vehicles are declared totaled over time [8]. Financial Performance - Copart has maintained higher average free cash flow margins and cash return on invested capital compared to its primary peer, IAA, which was recently acquired by RB Global [10]. - The company is debt-free and holds $4.4 billion in cash, representing about 9% of its market capitalization of $49 billion [13]. Valuation and Growth Potential - Following a recent sell-off, Copart trades at 28 times cash from operations, its lowest valuation in over two years, despite a 10% sales growth over the past year [15][17]. - The current dip in stock price presents a buying opportunity, as Copart continues to outperform its peers in revenue growth [17]. Summary of Investment Thesis - Copart is positioned as a leader in a duopoly with a wide moat, benefiting from geographic presence and increasing vehicle complexity, while maintaining better profitability and a stronger balance sheet than its primary competitor [18].

Company Performance - Copart, Inc. reported third-quarter fiscal 2025 adjusted earnings per share of 42 cents, in line with the Zacks Consensus Estimate, representing a year-over-year increase of 7.7% [1] - The company generated revenues of $1.21 billion, which fell short of the Zacks Consensus Estimate of $1.24 billion, but still marked a 7.5% increase from the previous year [1] - Service revenues for the quarter were $1.03 billion, up from $946.6 million year-over-year, but below the Zacks Consensus Estimate of $1.06 billion, accounting for 85.4% of total revenues [3] - Vehicle sales totaled $176.8 million, a decline from $180.6 million in the prior-year quarter and below the Zacks Consensus Estimate of $187 million, with U.S. sales increasing by 22% while international revenues dropped by 25% [4] Financial Metrics - Gross profit increased by 5.1% year-over-year to $552 million, while total operating expenses rose by 10.2% to $760 million [5] - Operating income rose to $451.5 million from $437.2 million recorded in the year-ago quarter, and net income grew 6.1% year-over-year to $405.3 million [5] - As of April 30, 2025, the company had cash, cash equivalents, and restricted cash of $2.36 billion, compared to $1.5 billion as of July 31, 2024 [5] Management Insights - Management noted that total loss frequency in the U.S. rose to 22.8% in the first calendar quarter of 2025, up about 100 basis points from the prior year, which is beneficial for Copart's business model as it leads to more salvage vehicles [7] - The company is making ongoing investments in storage capacity, technology, and operations to prepare for both everyday needs and storm-related surges, with expectations that rising total loss frequency will support long-term growth [8]

Group 1: Earnings Performance - Visa reported quarterly earnings of $2.76 per share, exceeding the Zacks Consensus Estimate of $2.68 per share, and up from $2.51 per share a year ago, representing an earnings surprise of 2.99% [1] - The company posted revenues of $9.59 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.34%, compared to $8.78 billion in the same quarter last year [2] - Over the last four quarters, Visa has consistently surpassed consensus EPS estimates four times and topped revenue estimates three times [2] Group 2: Stock Performance and Outlook - Visa shares have increased approximately 6.8% since the beginning of the year, contrasting with a -6% decline in the S&P 500 [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the upcoming quarter is $2.83 on revenues of $9.86 billion, and for the current fiscal year, it is $11.30 on revenues of $39.6 billion [7] Group 3: Industry Context - The Financial Transaction Services industry, to which Visa belongs, is currently ranked in the top 28% of over 250 Zacks industries, indicating a favorable outlook [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Visa's stock performance [5][6]