Copart, Inc. (CPRT): A Bull Case Theory 

We came across a bullish thesis on Copart, Inc. on Expanse Stocks’s Substack by Nikotes. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc.’s share was trading at $44.56 as of October 15th. CPRT’s trailing and forward P/E were 28.03 and 25.38 respectively according to Yahoo Finance.

Copart, Inc. delivered a quarter that clearly distinguished temporary headwinds from the strength of its competitive moat. While U.S. insurance unit volumes declined 2.1% due to cyclical factors such as higher premiums and underinsurance, the company demonstrated robust profitability, with net income up 22.9% YoY to $396.4 million, gross margin expanding 280 basis points to 45.3%, and operating margin rising 310 basis points to 36.5%. This performance was underpinned by operational leverage and a 5.7% increase in average selling prices (ASPs) in the U.S., which offset the volume softness and reinforced Copart’s pricing power.

Management emphasized that the volume weakness is cyclical rather than structural, driven by insurer fluctuations and a temporary decline in insured vehicles. The core investment thesis remains intact, centered on Copart’s superior auction liquidity, a global buyer base of over 300,000 members, and an extensive salvage yard network. This moat allows the company to consistently deliver higher net returns for insurance clients, with ASP growth outpacing competitors by more than fivefold, signaling its premium positioning in the market.

International volumes grew 3.3% in Q4 and 8.1% for the full year, with higher-margin consignment models in markets like Germany partially offsetting domestic softness. Copart also possesses substantial financial flexibility, with $4.8 billion in cash and $6 billion total liquidity, supporting potential buybacks or opportunistic M&A.

Looking ahead, investors will monitor U.S. insurance volumes, industry dynamics, and the sustainability of ASP growth. Even amid volume headwinds, Copart’s pricing power, margin expansion, and structural tailwinds highlight the resilience of its business model. For long-term investors, the quarter reinforces confidence in Copart as an exceptional company capable of generating strong returns regardless of cyclical fluctuations.

Previously we covered a bullish thesis on Copart, Inc. (CPRT) by Andvari in May 2025, which highlighted the company’s disciplined capital allocation, strong balance sheet, and global salvage auction dominance. The company’s stock price has depreciated approximately by 16.97% since our coverage. This is because the thesis didn’t fully play out amid temporary volume softness. The thesis still stands as Copart’s moat, pricing power, and operational leverage remain intact. Nikotes shares a similar perspective but emphasizes recent quarterly results showing cyclical volume dips versus structural strength.

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Disclosure: None.