Copart: Growth Priced In—Hold at $165 Fair Value
By stockpickr AI | March 1, 2026 | 10 min read
Investment Summary
Copart (Industrials) appears slightly overvalued based on the DCF analysis compared to its current trading price, suggesting that current growth expectations are already largely priced in.
Investment Recommendation
Hold
Fair Value: $165.00
Current Price: $176.70
Upside/Downside: -6.6%
DCF modeling suggests a fair value per share of approximately $165.00, implying a slight downside against the current market price of $176.70. While growth prospects are strong, the current premium valuation reflects robust expectations for continued high single-digit growth, limiting immediate upside potential.
Key Metrics
- Market Cap: $54.28B
- P/E Ratio: 42.3x
- Forward P/E: 33.1x
- Revenue Growth (YoY): 10.5%
- Net Margin: 24.5%
- ROE: 54.0%
- Debt/Equity: 0.07
- Dividend Yield: 0.0%
Strengths
- Dominant market share in the US salvage auction market, providing strong pricing power.
- High profitability demonstrated by a Net Margin historically above 20% and high Return on Equity (ROE near 54% TTM).
- Strong balance sheet with low leverage (D/E of 0.07) and significant free cash flow generation.
- Increasing volumes driven by rising vehicle repair costs and aging U.S. vehicle fleet.
Risk Factors
- Potential regulatory changes in how insurance companies process salvage vehicles, reducing Copart's take rate.
- Slowing pace of new total loss vehicles if the severity of vehicle damage claims decreases or deductible rates rise substantially.
- Intense competition from insurance company direct sales initiatives or rivals like IAA (Carvana/Rethmie) gaining market share.