CPRT Copart
A duopoly salvage marketplace on irreplaceable land, priced at roughly 7% implied growth; modestly beatable, not cheap.
The business
Copart runs online auctions, mostly for insurers disposing of total-loss and salvage vehicles. It collects fees from both sellers and buyers on each car it sells, and it stores and processes the vehicles on its own large network of yards. Global bidders, many overseas, buy through its VB3 platform. That bidder pool lifts sale prices, which pulls insurers toward Copart and leaves it with more cars to sell.
Quality gate · 86/100
Moat & management
| Moat | wide moat |
| Source | network effect |
| Trajectory | stable |
| Management | excellent |
Copart and IAA share a two-player market. Copart has the larger global buyer pool, which earns sellers higher returns, and owns land near cities that would be hard and slow to rezone and copy. Integration with insurers and its catastrophe surge capacity add switching costs. The moat looks stable rather than widening, because IAA under RB Global is competing harder on price and service.
The founders' culture continues. The company owns its land instead of leasing it, carries almost no debt, and has bought back stock in large opportunistic chunks, such as tenders, rather than routinely. The main criticism is a growing cash pile earning only treasury yields, which drags down returns on equity.
Owner-earnings inputs
| Owner earnings (TTM) | 1.34B |
| Owner-earnings yield | 5.0% |
| Free-cash-flow yield | 5.0% |
| Growth used (normalized) | 8.0% |
| Market-implied growth (reverse DCF) | 7.4% |
| Terminal growth | 3.0% |
| Discount rate (hurdle) | 9.7% |
Projected owner earnings
| Yr | Owner earnings | Growth | PV |
|---|---|---|---|
| 1 | 1.33B | 8.0% | 1.21B |
| 2 | 1.43B | 7.6% | 1.19B |
| 3 | 1.54B | 7.3% | 1.16B |
| 4 | 1.64B | 6.9% | 1.13B |
| 5 | 1.75B | 6.6% | 1.10B |
| 6 | 1.86B | 6.2% | 1.07B |
| 7 | 1.97B | 5.9% | 1.03B |
| 8 | 2.08B | 5.5% | 988.51M |
| 9 | 2.18B | 5.1% | 947.32M |
| 10 | 2.29B | 4.8% | 904.77M |
| 11 | 2.39B | 4.4% | 861.18M |
| 12 | 2.48B | 4.1% | 816.89M |
| 13 | 2.58B | 3.7% | 772.22M |
| 14 | 2.66B | 3.4% | 727.48M |
| 15 | 2.74B | 3.0% | 682.96M |
Key risks
- Fewer cars insured: drivers dropping collision coverage as premiums rise cuts salvage unit volumes
- IAA/RB Global winning back major insurer contracts by competing harder on price
- Normalizing used-car and scrap prices, plus falling interest income on cash, could squeeze reported earnings
- Over the long term, ADAS and autonomy could cut accident frequency, partly offset by more expensive repairs pushing more cars into total loss
Catalysts
- Total-loss rates keep rising as repair costs outpace vehicle values
- Growth in international and non-insurance volume, plus a bigger buyback or special distribution of the excess cash
⚠ maintenance capex ≈ min(capex, D&A), capped at FCF · Net cash 2.7B credited to value (interest stripped from owner earnings to avoid double-counting). · Price pays for ~7%/yr owner-earnings growth over 15y (reverse DCF); model credits 8%.