CPRT

Copart is a structurally advantaged business and the numbers show it. Revenue has compounded from $2.69B (FY2021) to $4.65B (FY2025) — five straight years of growth, +9.7% in the latest year — while net income climbed from $936M to $1.55B, expanding faster than sales (+13.9%). The margin profile is exceptional for a 'retail auto' SIC bucket: 36.5% operating margin and 33.4% net margin reflect a two-sided online-auction network (VB3) that competitors cannot easily replicate. The balance sheet is fortress-grade: liabilities of just $883M against $9.19B equity (0.10x), $2.78B cash (up 83.6% YoY), and effectively no long-term debt (last reported at $11.0M). Operating cash flow of $1.80B comfortably funds $569M of capex, leaving large and growing free cash flow. ROE of 16.9% is understated by the enormous, under-levered equity base now bloated with idle cash.

Valuation is the unusual part of the story. A franchise of this quality has historically commanded a premium multiple, yet shares trade at 17.7x FY diluted EPS of $1.59 and 5.9x sales — undemanding for a low-double-digit grower with 33% net margins and no leverage. Today's 8% drop widens that gap between price and quality. The MDA confirms the durable demand drivers: 81% of FY2025 volume came from insurance-company sellers monetizing total-loss and recovered-stolen vehicles, and management highlighted mobilizing for tens of thousands of flood-damaged vehicles after Hurricanes Helene and Milton — catastrophe events are recurring volume tailwinds, not one-offs.