Copart Faces Stock Decline Despite Strong Earnings Performance

Dallas, Texas-based Copart, Inc. (CPRT) is a leader in online auctions and vehicle remarketing services, boasting a market cap of $51 billion. This large-cap status, defined by companies valued at $10 billion or more, highlights its significant presence in the online vehicle auction industry. Copart’s extensive suite of services includes online seller access, salvage estimation, transportation, and vehicle inspection stations, reinforcing its top position in this market.

However, despite its strong market position, CPRT stock has seen a decline of nearly 18% from its all-time high of $64.38 reached on November 27, 2024. In the last three months, shares dropped by 14.1%, underperforming the industrial sector as noted through the Industrial Select Sector SPDR Fund’s (XLI) 4.9% decline over the same period.

Looking back six months, CPRT shares experienced a 6.7% increase, outperforming XLI, which only gained 3.2%. However, in the last year, CPRT’s stock fell by 3.9%, while XLI achieved an 8.1% gain. This downward trend is further confirmed by CPRT’s struggles trading below its 200-day and 50-day moving averages recently.

Despite reporting solid Q2 results, CPRT’s stock fell by 2.8% on February 21. The company announced robust revenue growth of 14%, amounting to approximately $1.2 billion. Additionally, its earnings per share (EPS) reached $0.40, surpassing Wall Street’s estimates by 5.3%. CPRT also reported a 13.2% increase in gross profit to $525.6 million and a 19% rise in net income, reaching $387.4 million compared to the previous year’s quarter.

Nonetheless, rising operating expenses, which grew by 15.1% year-over-year to $737.1 million, contributed to a contraction in operating margins. Consequently, operating income growth slowed to 12.2%, totaling $426.2 million. This increase in spending may have caused concern among investors.

In contrast, CPRT’s competitor, Liquidity Services, Inc. (LQDT), has performed well, soaring 31.6% over the last six months and 66% in the past year.

Among seven analysts covering CPRT stock, the consensus rating is a “Moderate Buy,” with a mean price target of $65, suggesting a potential upside of 23.1% based on current market prices.

On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.

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