Copart, Inc. (NASDAQ:CPRT) Financial Analysis: A Deep Dive into ROIC and WACC

Copart, Inc. (NASDAQ:CPRT) is a global leader in online vehicle auctions, providing services to process and sell salvage and clean title vehicles. The company operates in a competitive landscape with peers like Verisk Analytics, ANSYS, Cintas Corporation, CDW Corporation, and Old Dominion Freight Line. These companies, while not direct competitors in the vehicle auction space, are compared based on financial metrics like ROIC and WACC to assess capital efficiency.

Copart's ROIC of 16.34% is notably higher than its WACC of 10.31%, resulting in a ROIC to WACC ratio of 1.58. This indicates that Copart is effectively using its capital to generate returns that exceed its cost of capital. For investors, this is a positive indicator of the company's ability to create value from its investments.

In comparison, Verisk Analytics boasts a ROIC of 25.62% and a WACC of 7.79%, leading to a ROIC to WACC ratio of 3.29. This suggests that Verisk is highly efficient in its capital utilization, generating returns significantly above its cost of capital. This efficiency makes Verisk an attractive option for investors seeking high capital returns.

Old Dominion Freight Line also shows strong capital efficiency with a ROIC of 28.54% and a WACC of 8.77%, resulting in a ROIC to WACC ratio of 3.26. This places it among the top performers in terms of capital utilization, similar to Verisk Analytics, and highlights its ability to generate substantial returns on invested capital.

While Copart's ROIC to WACC ratio is commendable, it is surpassed by Verisk Analytics and Old Dominion Freight Line. These comparisons provide valuable insights for investors evaluating potential investments, emphasizing the importance of capital efficiency in generating shareholder value.

Copart, Inc. (NASDAQ:CPRT) is a global leader in online vehicle auctions, providing services to process and sell salvage and clean title vehicles. The company operates in a competitive landscape with peers like Verisk Analytics, ANSYS, Cintas Corporation, CDW Corporation, and Old Dominion Freight Line. These companies, while diverse in their operations, are compared based on financial metrics like ROIC and WACC to assess efficiency in capital utilization.

Copart's ROIC of 16.34% surpasses its WACC of 10.07%, resulting in a ROIC to WACC ratio of 1.62. This indicates that Copart is generating returns above its cost of capital, which is a positive sign for investors. In comparison, Verisk Analytics boasts a higher ROIC of 25.62% and a lower WACC of 7.58%, leading to a superior ROIC to WACC ratio of 3.38, suggesting more efficient capital use.

ANSYS, with a ROIC of 8.19% and a WACC of 9.01%, has a ROIC to WACC ratio of 0.91, indicating that its returns do not cover its cost of capital. This contrasts with Cintas Corporation, which has a ROIC of 25.74% and a WACC of 9.86%, resulting in a strong ROIC to WACC ratio of 2.61, reflecting effective capital management.

CDW Corporation's ROIC of 15.54% against a WACC of 7.83% yields a ROIC to WACC ratio of 1.99, showing efficient capital utilization. However, Old Dominion Freight Line leads with a ROIC of 30.29% and a WACC of 8.54%, achieving the highest ROIC to WACC ratio of 3.55 among the peers, highlighting its superior capital allocation strategy.

Copart, Inc. (NASDAQ:CPRT), a leading online vehicle auction services provider, recently reported its earnings for the third quarter of the fiscal year 2024. The company, headquartered in Dallas, specializes in selling damaged and total-loss vehicles to used-car dealers and dismantlers. With a slight increase in its earnings per share (EPS) to $0.39, Copart exceeded the estimated EPS of $0.3867. This performance is indicative of the company's robust financial health and its ability to surpass market expectations.

The reported revenue of approximately $1.13 billion for the quarter not only surpassed the estimated revenue of about $1.11 billion but also marked a significant increase from the previous year's figures. This growth in revenue is attributed to a 3.5% increase in vehicle sales, which reached $180.6 million. Such an increase underscores Copart's strong position in the salvage vehicle market, highlighting its efficiency in capitalizing on the demand for used and damaged vehicles.

Furthermore, Copart's net income for the quarter rose to $382.1 million, or 39 cents per share, up from $350.4 million, which was 36 cents per share, in the same period the previous year. This improvement in net income reflects the company's successful strategies in enhancing profitability and managing expenses effectively. The earnings surprise of 2.63%, as reported by Zacks Investment Research, further demonstrates Copart's ability to exceed analysts' expectations and maintain a positive trajectory in its financial performance.

The company's financial metrics, such as the price-to-earnings (P/E) ratio of approximately 37.81 and the price-to-sales (P/S) ratio of about 12.60, indicate a strong market valuation of Copart's earnings and sales, respectively. These ratios, along with a low debt-to-equity (D/E) ratio of approximately 0.016, showcase Copart's solid financial structure and investor confidence in its business model. The company's ability to generate significant revenue and net income growth year-over-year further solidifies its position as a key player in the Auction and Valuation Services industry.

Copart's performance in the third quarter of fiscal year 2024 highlights its continued growth and operational efficiency. With a revenue increase of 10.3%, or $105.4 million, from the previous year and a net income rise of 9.1%, or $31.9 million, Copart demonstrates its strength in the market and its potential for future growth. The company's strategic focus on expanding its vehicle sales division and enhancing its online auction platform has played a crucial role in achieving these financial outcomes.