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On Tuesday, CFRA analyst Garrett Nelson upgraded Copart stock, listed on (NASDAQ:CPRT), from Buy to Strong Buy, setting a price target of $70.00. Nelson maintained a 12-month target price based on a forward P/E ratio for fiscal year 2026 (July) of 38.9 times, which he believes is a justified premium over Copart’s five-year average forward P/E of 34.1 times. According to InvestingPro data, the stock currently trades at a P/E ratio of 40.17, reflecting its premium valuation status. The stock has recently experienced a significant pullback, declining nearly 16% in the past week.
Copart recently reported its earnings per share (EPS) for the April quarter at $0.42, an 8% increase from $0.39 during the same period last year, aligning with the consensus. However, the company’s revenue experienced a 7.5% rise to $1.21 billion, falling $20 million short of consensus expectations. Despite this, service revenue, which climbed by 9% year over year, more than made up for a 2% decline in vehicle sales revenue. InvestingPro analysis shows the company maintains strong financial health with an impressive current ratio of 8.16 and minimal debt, earning it a "GREAT" overall financial health score.
The company’s gross margin saw a contraction of 100 basis points to 45.6%, which was 120 basis points below the consensus. Nelson highlighted Copart’s growing net cash balance, now at $4.3 billion, as a positive indicator for future value creation through potential shareholder returns via buybacks or dividends, accretive acquisitions, or investments in organic growth.
Adding to the optimistic outlook for Copart, S&P Global Mobility reported this week that the average age of vehicles in the U.S. has reached a new record of 12.8 years, up from 12.6 years the previous year. Nelson suggests that this trend will likely benefit Copart. Based on these factors, the analyst has raised the stock rating to a Strong Buy from Buy. Nelson also maintained his EPS estimates of $1.60 for fiscal year 2025 and $1.80 for fiscal year 2026.
In other recent news, Copart Inc . reported its first-quarter 2025 earnings with an earnings per share (EPS) of $0.42, aligning with analyst expectations. However, the company’s revenue fell short of forecasts, coming in at $1.21 billion compared to the anticipated $1.23 billion. Despite the revenue miss, Copart’s global service revenue saw a 9% increase, driven by growth in both U.S. and international markets. The company maintains strong liquidity, boasting over $5.6 billion, including $4.4 billion in cash. In related developments, Copart continues to invest in infrastructure, acquiring a significant property in South Florida to enhance its vehicle storage capabilities for the upcoming storm season. Analyst firms such as CJS Securities and Baird have shown interest in Copart’s strategic moves and market positioning, with questions focusing on the company’s land asset strategy and the impact of tariffs on operations. The company remains focused on long-term growth, with no changes to its future guidance for EPS and revenue forecasts.
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