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Copart to Reap Gains from Expansions Amid Rising SG&A Costs


On Oct 9, we issued an updated research report on Copart Inc. CPRT.

On Sep 19, Copart reported adjusted earnings per share of 35 cents for fourth-quarter fiscal 2017 (ended Jul 31, 2017), beating the Zacks Consensus Estimate of 31 cents. Quarterly revenues rose 13.8% year over year to $378.6 million. Thus, the top line too surpassed the Zacks Consensus Estimate of $355.5 million.

For the fiscal end, the company reported an EPS of $1.66 from $1.11 recorded in the previous year, exceeding the Zacks Consensus Estimate of $1.26. Annual revenues also increased 14.2% year over year to $1.4 billion, almost in line with the Zacks Consensus Estimate.

Copart, Inc. Price and Consensus

Copart is expanding network facility to manage inflating volumes. The most recent facility expansions happened in New Orleans, LA and Minnesota. Year to date, the company has made 12 such extensions.

Additionally, the company is planning to widen footprint across continental Europe, including the United Kingdom through acquisitions of existing business and setting up new facilities.

The company has also been witnessing growth in annual revenues from vehicle sales. Yearly sales rallied 14.2% year over year to $1.4 billion in fiscal 2017.

However, high selling, general and administrative (SG&A) expenses might hamper the company’s sales in the long run. Also, upgraded safety features in new vehicles and development of driverless cars might cause a decline in demand for Copart’s products.

Price Performance

Shares of Copart have surged 27.8% year to date, substantially outperforming the 11.2% rally of the industry it belongs to.

Zacks Rank & Key Picks

Copart currently carries a Zacks Rank #3 (Hold).

A few better-ranked auto stocks are Toyota Motor Corporation TM, Daimler AG DDAIF and Westport Fuel Systems Inc. WPRT. While Toyota sports a Zacks Rank #1 (Strong Buy), Daimler and Westport Fuel hold a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Toyota has an expected long-term earnings growth rate of 7%.

Daimler has an expected long-term earnings growth rate of 2.8%.

Westport Fuel has an expected long-term earnings growth rate of 30%.

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