CP CPRT Copart Loading... : Investor Sentiment and Bull/Bear Views

The author argues CPRT is a durable franchise (yard density, catastrophe surge capacity, insurer workflow lock-in) but at ~$29 the ~5.5% owner-earnings yield on ~$22.5B EV means you pay roughly full price for quality. A generous 10-year model (7% revenue growth, owner margin drifting 26.7% to 25%, 20x 2036 exit multiple) yields only ~$48 in 2036, about 5.1% annually, and a 12% return would require buying near $15, roughly 88% below the current price. Stated risks include insurer customer concentration (~79% of volume), soft FY26 guidance (revenue +0.4%, profit -4%), a DOJ investigation and cash consumed by the $1.9B ACV deal. The author would own it in the $15-20 zone, but at $29 prefers to wait.

The author argues Copart is a strong franchise with yard density and insurer relationships, but at about $29 the owner-earnings yield is only ~5.5%, leaving little margin of safety. His 10-year model assumes 7% revenue growth, owner margins drifting from 26.7% to 25%, and a 20x exit multiple, producing only ~$48 in 2036 and ~5.1% annual return from $29. He would become interested around $15–20 for a ~12% expected return, while flagging insurer customer concentration, soft FY26 guidance, a DOJ investigation, and the $1.9B ACV deal as cautions.

Author argues Copart is too cheap at 16x earnings given a 26% free cash flow margin, 22.5% ten-year EPS CAGR, no debt, nearly $2 billion in cash after the ACV acquisition, and 20,000 acres of owned land. He notes Copart is a fee-collecting marketplace rather than a car reseller, operates in a duopoly with a more leveraged Ritchie Bros, and is run by the founder's son-in-law who plans to stay at least 10 years. The approved ACV acquisition should reduce reliance on total losses and expand Copart into the whole car market, with the main risk being evolving end markets that the company has the balance sheet to adapt to.