Brad Thomas
Founder & Lead Analyst of Wide Moat Research
Copart is a Strong Buy at 52-week lows, with Jay Adair's return and the planned ACV acquisition giving reasons to watch for a recovery. Its online auctions sit on a hard-to-replicate network of vehicle yards, a junkyard tollbooth hiding in plain sight, and the stock trades at about 17.6x earnings versus a historical 26.9x. Growth has slowed; the thesis depends on volume recovering and ACV expanding the opportunity. x.com x.comÂ
Copart's yard network acts as a real estate tollbooth, and the stock trades at half its historical multiple. Its online auctions depend on over 20,000 acres of yards, and zoning hurdles make that land a real moat. Shares trade at about 20.9 times free cash flow versus a historical 43.3 times, while free cash flow has compounded about 23% a year since 2013 and analysts forecast 10% growth in 2027 and 12% in 2028. The slowdown and ACV deal merit scrutiny; rated Strong Buy. x.comÂ
Copart's aggressive buybacks and incoming volume make a reversal plausible. Management spent $1.6 billion on repurchases in FY26, retiring over 43 million shares at about $37.63 on average in nine months, above today's price; it still has about $4.5 billion in cash and securities. $27.88 is the trigger, with chart targets at $28.88, $29.66 and $30.80. x.comÂ
Copart's $1.9B all-cash ACV Auctions deal makes sense as a platform buy that moves Copart up the vehicle lifecycle, despite ACV's unimpressive numbers. ACV adds a dealer wholesale marketplace, inspections, transport, financing and AI valuation; combined with Copart's buyer network and vehicle history, that data could decide where each car goes and what it is worth. Copart pays a ~45% premium from $4.5B of cash with no debt and expects accretion from FY2028; its core must keep growing. x.comÂ
Copart looks more like a cyclical bet on insurance volumes than a durable leader. Its strengths were just as true in 2010-2020, yet something changed, and without identifying what would restore its lead over IAA, the case relies on volumes recovering. Rising ADAS penetration makes the volume problem look secular. x.comÂ
Copart may be an opportunity because its problems look short-term while its fundamentals stay incredibly clean: zero debt, a large cash pile and a cheap valuation. It takes a fee on every online auction of totaled cars insurers send it, without owning them, a cash machine with historically high margins. Since mid-2025, weak winter earnings, lower volumes as safer cars and pricey insurance lead drivers to pay for small accidents themselves, and a dip from its 42% operating margin hurt the stock. … Show more
Copart probably offers a decent risk/reward at under 20x next-twelve-month earnings, if those numbers are believed to be true. x.comÂ
Copart, a high-quality leader, might be an opportunity because its multiple has been cut by two-thirds while the business has not deteriorated. x.com x.comÂ
Copart is the third name on a numbered list that also includes Adobe. x.comÂ
Copart benefits from driver-assistance and autonomous vehicles because it charges a take rate on the rising dollar value of total vehicle losses. LKQ is the real loser, as a buyer servicing fewer volumes whose European expansion disappointed, and it is now priced for no terminal growth, which could be right. x.comÂ
Carvana's rising costs and falling loan-sale gains leave volume growth without operating leverage. Ad spending rose to $152M from $121M last quarter, and $3.45B of inventory enters a seasonally weak quarter. Gain on sale fell less than expected; it still tops $2,000 upfront on a roughly $25,000 car, but the chart uses all retail units, not just financed ones. The after-hours rise should fade, and an ABS-market freeze would make those gains irrelevant. x.com x.com x.com x.comÂ
Carvana faces a tough road ahead based on its earnings and management commentary. Anyone expecting 30%+ growth for a while could be surprised within a few quarters by major deceleration and margin pressure. x.comÂ
