Assessing Copart (CPRT) Valuation After Recent Share Price Weakness And Undervaluation Signals

Recent share performance and business context

Copart (CPRT) shares have pulled back recently, with a 1 day return of around a 3% decline, and weaker performance over the past week, month, and past 3 months drawing fresh attention from investors.

The company runs online auctions and vehicle remarketing services across multiple countries, processing and selling vehicles over the internet for dismantlers, rebuilders, dealers, exporters, and the public.

See our latest analysis for Copart.

At a share price of US$35.36, Copart’s recent pullback, including a 30 day share price return of around a 15% decline and a 1 year total shareholder return of about a 38% loss, suggests momentum has cooled after relatively modest 3 and 5 year total shareholder returns.

If Copart’s recent weakness has you reassessing opportunities, this could be a good moment to scan other areas of the market. You could start with our screener of 22 top founder-led companies.

With revenue of about US$4.6b and net income of roughly US$1.6b, plus some recent share price weakness and suggested discounts to certain fair value and price target estimates, you have to ask: is this a reset buying window, or is the market already baking in future growth?

Most Popular Narrative: 28% Undervalued

With Copart last closing at $35.36 against a narrative fair value of $48.89, the most widely followed view frames the shares as meaningfully discounted, with insurance trends and digital tools at the heart of the story.

Analysts are assuming Copart's revenue will grow by 11.1% annually over the next 3 years.

Analysts assume that profit margins will increase from 33.4% today to 33.7% in 3 years time.

Read the complete narrative.

Want to see what underpins that higher fair value? The narrative leans on steady expansion in sales, firm margins, and a richer earnings multiple. The real driver is how those pieces are stacked together. The full story sits in the detailed projections behind that target.

Result: Fair Value of $48.89 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside story faces real questions if accident frequency continues to fall or if more damaged vehicles remain outside traditional insurance channels.

Find out about the key risks to this Copart narrative.

Next Steps

If the mixed tone of this article leaves you on the fence, this is a good time to look at the numbers yourself and move quickly. To see what is driving investor optimism, take a closer look at the company’s 4 key rewards.

Looking for more investment ideas?

Before you move on, give yourself a broader watchlist by checking out a few focused groups of stocks that could sharpen your next investing move.

• Target strong value potential by scanning our list of 56 high quality undervalued stocks that pair quality fundamentals with prices that may look appealing on closer inspection.
• Prioritise resilience by reviewing 80 resilient stocks with low risk scores that score well on stability so sharp drawdowns are less likely to catch you off guard.
• Get ahead of the crowd by tracking a screener containing 23 high quality undiscovered gems that the market may not be paying close attention to yet.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com