Financials and Estimates

Financials and Estimates

Copart's last three fiscal years read as a debt-free machine still compounding: revenue rose from $3.87 billion to $4.65 billion and diluted EPS from $1.28 to $1.59, all self-funded. But the pace has downshifted — from a pandemic-era 30% surge to a steady ~10%, and consensus now models a roughly flat fiscal 2026 before low-single-digit growth resumes. Earnings quality improved even as the top line cooled, with free-cash conversion rising and interest on the cash pile now supplying close to a tenth of pre-tax profit.

Three years of results

Fiscal 2025 (year ended July 31, 2025) closed with $4.65 billion of revenue, $1.70 billion of operating income, and $1.55 billion of net income attributable to Copart — a 13.9% earnings gain on 9.7% revenue growth [1].

Source: FY2025 Annual Report (Form 10-K), Consolidated Statements of Income [2] and Consolidated Statements of Cash Flows [3].

The three-year income statement shows a business growing profit faster than sales. Operating income advanced 7.9% in fiscal 2025 while net income rose 13.9% and diluted EPS 13.6% — the wedge between them is a growing stream of interest income and a lower tax rate, discussed below [4].

Source: FY2025 Annual Report (Form 10-K), Consolidated Statements of Income; margins derived from reported figures [5].

Operating margin slipped from 38.4% to 36.5% over the three years — partly $56 million of one-time hurricane (Helene and Milton) catastrophe costs in facility operations during fiscal 2025 — while net margin actually rose to 33.4% [6]. The consolidated statement carries no financial debt; growth was funded entirely from operating cash flow.

The growth downshift

The revenue trajectory is the crux of the report's growth question. Growth ran at 30% in fiscal 2022 as used-vehicle values spiked, then settled into a remarkably consistent ~10% band for three years, and consensus now models a roughly flat fiscal 2026 before a return to low-single-digit growth.

Sources: FY2023–FY2025 reported revenue from FY2025 Annual Report (Form 10-K), Consolidated Statements of Income [7]; FY2021–FY2022 from prior-year 10-K filings, as reported; FY2026E–FY2027E consensus estimates, as reported.

Sources: derived from reported revenue — FY2023–FY2025 per the FY2025 10-K [8], FY2021–FY2022 from prior-year 10-K filings; FY2026E–FY2027E consensus estimates, as reported.

Underneath the flat headline, the mix tells the story. Fiscal 2025's 11.4% service-revenue growth came from both higher revenue per car and volume, while vehicle sales — Copart buying and reselling cars on principal rather than on consignment — were flat as international sellers shifted to the consignment model [9] [10]. Fee-based service revenue is now 85% of the total, up from 83% in fiscal 2023 — the asset-light core keeps taking share of the revenue base [11].

The stall became visible in fiscal 2026's first three quarters, which have been roughly flat against a year earlier. The pressure is on unit volume, not price: management reported global insurance unit sales down 2.7% in the third quarter (down 1.9% excluding prior-year catastrophe volume), and U.S. insurance volume down 4.2%, following a weaker second quarter in which global insurance units fell 9% [12] [13].

Source: quarterly revenue by geography and type, per company filings, as reported.

Management's own framing is that the volume dip is cyclical, not structural: it attributes softer insurance assignments to shifts in policies-in-force and exposure, and maintains that "the long-term growth algorithm for our insurance business remains very much intact," because gradual declines in accident frequency are "more than offset by increases in total loss frequency" [14]. Whether that holds is what a durable-compounder read is most sensitive to; the total-loss-frequency tailwind sits in the industry chapter to come.

Quality of earnings

The three years improved on cash conversion. Free cash flow rose to $1.23 billion in fiscal 2025 — 79% of net income, up from 68% two years earlier — as operating cash flow jumped 22% while capital expenditure on owned land and yards held near $0.57 billion [15].

Source: derived from reported financials, FY2023–FY2025 10-Ks (income statement [16], balance sheet [17]).

Two of those lines deserve a caveat. Net interest income climbed from $65.9 million to $178.9 million across the three years and now equals about 9% of pre-tax profit — a genuine cash return, but one that rises and falls with Treasury yields rather than with the auction business [18]. And headline returns have drifted lower — return on equity from 20.7% to about 16.9%, return on capital employed from 23.8% to 18.0% — not because the business earns less, but because a swelling low-yield cash and Treasury balance dilutes the denominators. The operating business still earns a ~36% margin; what a reader is watching decline is a balance-sheet artifact, and how that cash gets deployed is a question for the capital-allocation chapter.

What consensus expects

Copart issues no formal financial guidance, so the forward view rests on sell-side consensus, which extends about two years. It models fiscal 2026 revenue essentially flat at $4.64 billion with EPS of roughly $1.58 — level with fiscal 2025 — then a return to modest growth in fiscal 2027, revenue up 3.9% to $4.83 billion and EPS up 6.2% to about $1.68.

Source: FY2025 actual per Consolidated Statements of Income [19]; FY2026E–FY2027E consensus estimates (13 analysts), as reported.

Price targets frame how divided that view is. Against a $29.12 share price, the consensus 12-month target is a mean of $40.3 (median $41), with a $55 high and a $26 low — a spread wide enough that the analyst community is not agreed on whether the de-rating is finished.

Source: consensus analyst price targets, as reported.

The rating split is similarly balanced: of 13 covering analysts, 7 rate the stock buy or better, 5 hold, and 1 strong sell. On consensus numbers the shares trade at roughly 18 times fiscal 2026 EPS — near the low end of the past decade for a business that grew earnings double digits last year, which is the tension the rest of the report works through. The evidence here points to a still-compounding, cash-generative franchise whose growth engine has stalled on volume; the read that would change is a second or third year of falling insurance units, which would move the flat patch from cyclical to structural.

Ratings: 13 analysts — 2 strong buy, 5 buy, 5 hold, 1 strong sell, per consensus data, as reported.