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

We came across a bullish thesis on Copart, Inc. on Andvari’s Substack by Douglas Ott. In this article, we will summarize the bulls’ thesis on CPRT. Copart, Inc.’s share was trading at $40.62 as of January 28th. CPRT’s trailing and forward P/E were 24.77 and 24.10 respectively according to Yahoo Finance.

Copart, Inc. provides online auctions and vehicle remarketing services in the United States and internationally. CPRT has recently faced pressure on its share price following a moderation in unit volume growth, particularly in the U.S., where fee units declined amid higher insurance premiums and a rising population of uninsured and underinsured motorists.

While global unit sales grew 4.8% in fiscal year 2025, the fourth quarter saw a modest decline, contributing to investor concern and a sharp pullback in the stock from nearly $64 to around $45. However, these volume trends reflect temporary, cyclical dynamics rather than a deterioration in Copart’s underlying business quality or competitive position.

Despite softer U.S. volumes, Copart continues to demonstrate strong operational performance. Fourth-quarter operating margins expanded to 36.7%, exceeding prior-year levels, and cash generation remains robust, with over $500 million in quarterly capex still resulting in a $1.37 billion year-over-year increase in cash balances. Cash now represents more than 10% of Copart’s market capitalization, underscoring balance sheet strength and financial flexibility.

The decline in reported units is also partly strategic. Management has intentionally deemphasized lower-value vehicles to optimize long-term profitability, reallocating resources toward higher-margin fee-based transactions. More importantly, Copart’s International business is reaching a key inflection point, as continental Europe—particularly Germany—accelerates its transition toward Copart’s U.S.-style consignment model. This shift reduces purchased unit volumes but materially improves margin structure and aligns incentives with insurance partners. As a result, International EBITDA margins have risen to a record 40.2%, approaching U.S. levels.

With secular trends favoring higher total loss frequency, improving international economics, expanding margins, and substantial free cash flow generation, Copart appears well positioned for long-term value creation. The recent volume softness and share price weakness present a compelling bullish opportunity rather than a structural concern.

Previously, we covered a bullish thesis on Copart, Inc. (CPRT) by Andvari on Substack in May 2025, which highlighted the company’s cash-rich balance sheet, disciplined capital allocation, and long-term compounding model. CPRT’s stock price has depreciated by approximately 24.31% since our coverage due to unit volume softness and growth concerns. Douglas Ott shares a similar view but emphasizes on cyclical insurance dynamics and international margin expansion.

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Disclosure: None.