With the current trading price of $31.67 per share, Copart is worth $3.95 billion in the stock market. The market is valuing Copart at 17.4x forward earnings and 12.34x EV/EBITDA. Copart’s valuation surprisingly is still cheaper than CarMax’s. CarMax is valued at 18.3x forward P/E and more than 17x EV/EBITDA. AutoZone seems to be the cheapest, with 11.12x forward earnings and 8.72x EV/EBITDA.
Since 2012, Copart has expanded its business overseas. In August, it acquired Ride Safely Middle East Auction in Dubai, UAE. In September, it announced the opening of its new facility in New Hampshire to address growing demand volume in the New England region. In November, the business was expanded to Germany via the acquisition of WOM Wreck Online Marketing Aktiengesellschaft. EPS is estimated to grow to $1.82 next year. Personally, I think in a few years time, Copart would keep expanding its business overseas using its sustainable cash flow from operations. Thus, its EPS would be on the rise.
Foolish Bottom Line
Although the CEO is selling out at its 52-week high, he and his related family members are still holding significant stakes in Copart. The superior margin and return seem to be quite attractive. However, the double digit EV multiples have resisted me from initiating a long position in Copart at the moment.
The article The Best Stock in the Vehicle Remarketing Industry originally appeared on Fool.com and is written by Anh HOANG.
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