Copart: Cheap, Cash-Rich, and Still Can't Catch a Bid

Here's a stock that shouldn't be this hard to love. Copart prints 33%-plus net margins, sits on $3.35 billion in cash against less than a billion in debt, just beat earnings, and trades at 16-ish times forward earnings versus historical multiples in the 20s and 30s. And yet the chart looks like it got hit by one of the totaled vehicles it auctions off — down roughly 42% over the past year, parked near a 52-week low, RSI sitting in the mid-30s. Somebody's wrong here, and it's either the tape or the balance sheet.

Let's start with what actually happened. Q3 FY2026 was fine — better than fine. Revenue of $1.24 billion, up 2.1% year-over-year, EPS of $0.43 beating estimates by nearly 5%. Gross profit up 3.7%. The mix shift toward service and purchased-vehicle sales and higher average selling prices did the heavy lifting while insurance unit volumes actually fell 2.7%. That's the tell buried in the good headline number: the core insurance-salvage engine, the thing that made Copart a monopoly-adjacent cash machine in the first place, is losing volume. Non-insurance units are picking up the slack (+11.2%), which is a genuinely interesting pivot, but it's a different business with different competitive dynamics.

Then came the corporate soap opera. On July 9, Copart announced Jay Adair is stepping down July 31 and Jeff Liaw — the former CEO — is coming back. Round-trip leadership changes are rarely neutral events. Sometimes they signal a steady hand returning to right the ship; sometimes they signal the board didn't love where things were headed under the last regime. The company is framing it around three pillars — international insurance expansion, domestic whole-car growth, and AI-flavored technology services (there's now something called "AlphaStreet Intelligence," because apparently every company needs an AI product now) — but strategy slides don't move stocks. Execution does, and we won't know anything about execution until the September 3 Q4 print, where the Street is already modeling a sequential deceleration to $0.39 EPS on $1.14 billion in revenue.

Copart also flexed a bit, resuming a $500 million buyback on July 13. Good — that's the kind of capital-return signal a battered stock needs. But there's a wrinkle worth sitting with: cash fell by $1.75 billion quarter-over-quarter with no clean explanation offered. Maybe it's timing on receivables, maybe it's a real allocation decision nobody's disclosed properly yet. Either way, "trust us" isn't a great look for a company whose entire investment case rests on fortress-balance-sheet optionality.

The analyst community is basically arguing with itself. Barclays is Underweight with a $26 target — below where the stock sits today. Stephens, meanwhile, initiated Equal Weight with a $50 target and a nearly 37% return thesis stretched out to 2030. When two shops that presumably read the same 10-Q land on numbers that far apart, it tells you the market genuinely doesn't know what to do with this name right now. That disagreement is usually where the opportunity — or the value trap — lives.

Here's my read: the fundamentals haven't broken, but the growth story has downshifted from a CAGR story to a low-single-digit story, and the market is repricing that reality faster than management is addressing it. Revenue growth has decelerated to roughly 1% on a trailing basis even as margins hold up beautifully — that's a company milking pricing and mix rather than genuinely growing volume. That's fine for a while. It's not a multiple-expansion story until proven otherwise.

So don't chase the bounce. The stock is technically broken — below both the 20- and 50-day averages, hugging $27 support with a wall at $31-32. A reclaim of that resistance on real volume, paired with visible capital deployment (that buyback needs to actually show up in the share count) or a genuine reacceleration above 1% growth by September, is the signal worth waiting for. Until then, this is a name to nibble on weakness, not one to romanticize. Copart isn't broken. It's just no longer cheap and growing — it's cheap or growing, and the market is still deciding which word matters more.