Copart Inc (CPRT, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $42.78, Copart Inc has witnessed a decline of 4.62% over a period, marked against a three-month change of -1.55%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Copart Inc is well-positioned for substantial growth in the near future.
Decoding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Here is a breakdown of Copart Inc's GF Score:
- Financial strength rank: 10/10
- Profitability rank: 10/10
- Growth rank: 10/10
- GF Value rank: 3/10
- Momentum rank: 6/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in financial strength, profitability, and growth, and moderate ranks in GF value and momentum, GuruFocus assigned Copart Inc the GF Score of 93 out of 100, which signals the highest outperformance potential.
Understanding Copart Inc's Business
Based in Dallas, Copart Inc operates an online salvage vehicle auction with operations in 11 countries across North America, Europe, and the Middle East, facilitating over 3.5 million transactions annually. The company utilizes its virtual bidding platform, VB3, to connect vehicle sellers with over 750,000 registered buyers around the world. Buyers primarily consist of vehicle dismantlers, rebuilders, individuals and used vehicle retailers. About 80% of Copart's vehicle volume is supplied by auto insurance companies holding vehicles deemed a total loss. Copart also offers services such as vehicle transportation, storage, title transfer, and salvage value estimation. The company primarily operates on a consignment basis and collects fees based on the vehicle's final selling price.
With a market cap of $41.07 billion and sales of $3.76 billion, Copart Inc has an operating margin of 37.83%. This is the income breakdown of Copart Inc:
Financial Strength Breakdown
According to the Financial Strength rating, Copart Inc's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure.
The Interest Coverage ratio for Copart Inc stands impressively at 534.92, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 36.99, Copart Inc exhibits a strong defense against financial distress, highlighting its robust financial stability.
With a favorable Debt-to-Revenue ratio of 0.03, Copart Inc's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Copart Inc's impressive standing among its peers in generating profit.
Copart Inc's Operating Margin has increased (9.35%) over the past five years, as shown by the following data: 2019: 35.09; 2020: 37.00; 2021: 42.21; 2022: 39.28; 2023: 35.46; .
Copart Inc's strong Predictability Rank of 4.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Copart Inc demonstrates a strong commitment to expanding its business.
The company's 3-Year Revenue Growth Rate is 19.6%, which outperforms better than 84.23% of 983 companies in the Business Services industry.
Moreover, Copart Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 22.7, and the rate over the past five years is 23.2. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given Copart Inc's strong financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential outperformance. This analysis underscores the company's robust financial health, consistent profitability, and impressive growth trajectory, making it a compelling investment opportunity for value investors.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
