Feb 10, 2023

Copart, Inc. (CPRT) Long Term: 6-12 Months Zacks Recommendation: Neutral
(Since: 12/03/21)
$69.22 (As of 02/09/23)
Prior Recommendation: Outperform
Price Target (6-12 Months): $73.00
Short Term: 1-3 Months Zacks Rank: (1-5) 4-Sell

Zacks Style Scores: VGM:C

Value: D Growth: A Momentum: D

Summary Price, Consensus & Surprise

Thanks to Copart’s large scale, solid market leadership and
continued expansion efforts, we expect Copart’s total
revenues to witness a year-over-year growth of 6.6% and
0.6%. Salvage auction volumes are likely to remain elevated
amid increase in vehicle miles travelled and higher collision
frequency. Expected increase in total loss rates bode well for
Copart’s top-line growth. Strong balance sheet and strategic
collaborations and acquisitions act as tailwinds. However,
elevated investments to support growth initiatives are likely to
limit Copart’s margins. Also, operating costs are also on the
rise since several quarters and the trend is set to continue.
Unfavorable forex translations also act as a spoiler. Thus, the
stock warrants a cautious stance for the time being.

Data Overview Sales and EPS Growth Rates (Y/Y %)

52 Week High-Low $70.93 - $51.11 Sales EPS

20 Day Average Volume (sh) 1,575,010

Market Cap $33.0 B

YTD Price Change 13.7%

Beta 1.20

Dividend / Div Yld $0.00 / 0.0%

Industry Auction and Valuation Services

Zacks Industry Rank Top 9% (22 out of 250)

Sales Estimates (millions of $)

Last EPS Surprise -7.3%
Q1 Q2 Q3 Q4 Annual*
Last Sales Surprise 1.0%
2024 947 E 973 E 1,036 E 1,044 E 4,000 E
EPS F1 Est- 4 week change 0.0%
2023 893 A 925 E 993 E 920 E 3,731 E
Expected Report Date 02/15/2023 2022 810 A 867 A 940 A 883 A 3,501 A
Earnings ESP 0.0%
EPS Estimates
Q1 Q2 Q3 Q4 Annual*
P/E TTM 31.3
2024 0.54 E 0.57 E 0.61 E 0.59 E 2.31 E
P/E F1 31.5
2023 0.51 A 0.55 E 0.59 E 0.55 E 2.20 E
PEG F1 NA 2022 0.54 A 0.55 A 0.59 A 0.57 A 2.23 A
P/S TTM 9.2 *Quarterly figures may not add up to annual.

The data in the charts and tables, except the estimates, is as of 02/09/2023. The reports text, the analyst-provided estimates, and the price target
are as of 02/10/2023.

© 2023 Zacks Investment Research, All Rights Reserved 10 S. Riverside Plaza Suite 1600 · Chicago, IL 60606
 Overview
Based in Dallas, TX, Copart, Inc. was founded in 1982. The company
provides online auction and a wide range of remarketing services to
process and sell salvage and clean title vehicles. This is done mainly
over the Internet, through its Virtual Bidding Third Generation (VB3)
Internet auction-style sales technology. Sellers are primarily insurance
companies, banks and financial institutions, charities, car dealerships,
fleet operators, and vehicle rental companies. Buyers include licensed
vehicle dismantlers, rebuilders, repair licensees, used vehicle dealers
and exporters, along with the general public.

Copart’s services include online supplier access, salvage estimation

services, end-of-life vehicle processing, virtual insured exchange,
transportation services, vehicle inspection stations, on-demand
reporting, DMV processing and flexible vehicle processing programs,
among others.

The company primarily has two revenue streams: service

revenue and purchased vehicles. Copart derives service revenues from
vehicle sales when it acts as an intermediary. In such cases, the firm
doesn't take ownership of the vehicle. It makes money through fees
when it is auctioned through its website. Purchased vehicles revenues
come from sales when Copart has acquired the ownership of the vehicle
and sells it at a higher price, pocketing the difference.

In the United States, Canada, Brazil, the Republic of Ireland, Finland, the U.A.E., Oman, Bahrain, and Spain, Copart sells vehicles primarily as an
agent and earns revenue from auction related sales transaction fees paid by vehicle suppliers and vehicle buyers, as well as the associated fees
for services following the auction, such as towing and storage. In the United Kingdom, Spain and Germany, it operates both as an agent as well
as on a principal basis. It also serves as an agent in the United Kingdom. In Germany and Spain, Copart also generates revenue from sales
listing fees for listing vehicles on behalf of insurance companies.

With operations at over 200 locations in 11 countries, Copart has more than 250,000 vehicles available online every day. The company currently
operates in the United States, Canada, the United Kingdom, Brazil, the Republic of Ireland, Germany, Finland, the United Arab Emirates, Oman
and Bahrain, and Spain.

Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 2 of 9
 Reasons To Buy:
Copart enjoys a leadership position in the automotive auction market, commanding roughly Copart's solid market
40% of the market share. The company’s competitiveness is supported by its multiple leadership, continued
locations (both domestic and international) and size of its new facilities openings. Thanks to expansion efforts and
its large scale, solid market leadership and continued expansion efforts, we expect Copart’s balance sheet strength are
total revenues in fiscal 2023, 2024 and 2025 to witness a year-over-year growth of around major tailwinds.
6.6%, 7.2% and 9.7%, respectively. Our estimates for

Salvage auction volumes are likely to remain elevated amid increase in vehicle miles travelled
and higher collision frequency. Additionally, aging vehicles and technologically-advanced auto parts are also proving to be a boon for the
industry participants like Copart. Costs of replacing such sophisticated components are extremely high, prompting insurance agencies to
declare the vehicles as total loss. Expected increase in total loss rates bode well for Copart’s top-line growth.

High average selling prices (ASPs) of used cars are also driving growth. Increasing ASPs leads to Copart generating higher service revenue
with every transaction. Copart’s service revenues, especially from the United States, form the bulk of its total revenues. Our estimates
suggest a year-over-year growth of 7.3%, 7.6% and 8.8% in U.S. service revenues in fiscal 2023, 2024 and 2025, respectively.

Buyout of AVK and Vincent Auto Solutions have expanded Copart’s portfolio and foothold. Expansion initiatives along with digital ramp up
will aid Copart in a fast pickup across the country, fueling growth in a competitive marketplace. Launch of Copart Max has further stepped up
its digital game. Strategic partnership with CHAMPtitles to introduce an automated digital platform for car sellers also bodes well.

The firm’s strong balance sheet with low leverage and high liquidity provides it with financial flexibility. Copart’s total debt to capitalization
stands at 0.04%, compared with the industry’s 8%. At the end of the first quarter of fiscal 2023, the company had $2.8 billion of liquidity,
comprising $1.5 billion in cash/cash equivalents and an undrawn credit revolver of more than $1.2 billion. Its times interest earned ratio of 186
is favorable to the industry ratio of 36, lowering the risk of default.

Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 3 of 9
 Reasons To Sell:
Elevated investments to support growth initiatives, including expansion of the business in Elevated investments to
international markets and the United States, are likely to limit Copart’s margins. The company support growth initiatives,
has been doubling down on storage-capacity expansion. In the first quarter of fiscal 2023, including expansion of the
capex amounted to $152.7 million (more than double the prior-year quarter), 80% of which business in international
was related to capacity expansion. Copart will continue to prioritize expansion efforts, which markets and the United
although necessary and advantageous for long term, is likely to clip cash flows. States, are likely to limit
Copart’s margins.
The company is also struggling with increased labor and temporary storage costs. Operating
costs are also on the rise since several quarters amid increasing G&A expenditure and the
trend is set to continue. In fiscal 2022, the company’s G&A expenditure increased 18.2%
year over year. Our projections for G&A costs call for a year-over-year rise of 5.7%, 7.2% and 9.7% in fiscal 2023, 2024 and 2025,
respectively.

Copart’s presence in various international markets makes it vulnerable to foreign currency fluctuations. In the last reported quarter, the
company saw a currency headwind of more than $23.6 million due to the dollar's strength. Forex woes will continue to weigh on international
buyers as a strong dollar amid stubborn inflation would translate to less international revenues in dollar terms.

Advancement in technology is currently a driving factor for the salvage auto auction industry as high repair costs for superior parts are
resulting in increasing total loss frequency by insurers. However, as safety technology and driverless technology improve over the years,
there might be a downward trend in the frequency of collisions. This could impact Copart’s inventory levels, which in turn, will hamper
revenue growth. Also, it should also be noted that Copart depends on a limited number of major vehicle sellers for a substantial portion of its
revenues and the loss of one or more of these major sellers may adversely affect growth rates.

While high ASPs are good for Copart, there’s a caveat to it. When used car prices are higher, it makes more sense to repair a car than to
deem it a total loss, thereby impacting Copart's supply. This decreasing loss frequency ratio could prove as a headwind for the company.
Notably, record high used vehicle prices have negatively impacted total loss frequency of Copart and have tempered overall insurance
volume growth. Total loss frequency in the last reported quarter was down approximately 220 basis points from the corresponding year-ago
quarter. In fact, the management has always been ambivalent about the whether it favors high or low used vehicle prices.

Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 4 of 9
 Last Earnings Report
Copart Q1 Earnings Miss & Falls Y/Y Quarter Ending 10/2022

Copart reported first-quarter fiscal 2023 (ended Oct 31, 2022) adjusted earnings per share of 51 Report Date Nov 16, 2022
cents, missing the Zacks Consensus Estimate of 55 cents. The underperformance was due to Sales Surprise 1.01%
lower-than-anticipated service revenues and high costs. The bottom line inched down 5.6% year EPS Surprise -7.27%
over year. The online auto auction leader generated revenues of $893.3 million, beating the Zacks
Quarterly EPS 0.51
Consensus Estimate of $884 million. The top line also increased 10.3% from the year-ago
reported figure. Annual EPS (TTM) 2.21

Key Tidbits

Fiscal first-quarter service revenues came in at $726.8 million, up from $667.8 million recorded in the year-earlier period. Service revenues
accounted for 81.3% of the total revenues. The figure missed the consensus mark of $729 million. Vehicle sales totaled $166.5 million in the
quarter, up from the prior-year level of $142.3 million. The figure exceeded the consensus mark of $164 million.

Gross profit was down 4% year over year to $369.5 million. Total operating expenses flared up 21.2% to $581.8 million. General and
administrative expenses rose 8.3% from the prior-year quarter to $44.5 million. Operating income declined to $311.5 million from $330.1 million
recorded in the year-ago quarter. Net income contracted 5.6% year over year to $245.8 million.

Copart had cash, cash equivalents and restricted cash of $1,539.4 million as of Oct 31, 2022, compared with $1,384.2 million as of Jul 31, 2022.
Long-term debt reduced to $1,969,000 at the end of the reported quarter from $1,996,000 as of Jul 31, 2022.

Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 5 of 9
 Valuation
Copart’s shares are up 7.7% and 14.1% over the past six months and in the trailing 12-month period, respectively. Stocks in the Zacks Auction
and Valuation Services industry and the Zacks Auto-Tires-Trucks sector are up 2.2% and down 23.1%, respectively, over the past six months.
Over the past year the Zacks sub industry and sector are up 10.2% and down 33.1%, respectively. The S&P 500 index is down 2.9% and 8.3%
over the past six months and in the past year, respectively.
The stock is currently trading at 29.71X forward 12-month earnings, which compares to 27.32X for the Zacks sub-industry, 16.66X for the Zacks
sector and 18.6X for the S&P 500 index.

Over the past five years, the stock has traded as high as 43.27X and as low as 19.77X, with a 5-year median of 29.62X. Our Neutral
recommendation indicates that the stock will perform in line with the market. Our $73 price target reflects 31.46X forward 12-month earnings per
share.

The table below shows summary valuation data for CPRT:

Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 6 of 9
 Industry Analysis Zacks Industry Rank: Top 9% (22 out of 250) Top Peers
Company (Ticker) Rec Rank
Ritchie Bros. Auctioneers Outperform
Incorporated (RBA)
Autoliv, Inc. (ALV) Neutral

AutoNation, Inc. (AN) Neutral

IAA, Inc. (IAA) Neutral

Blue Bird Corporation (BLBD) Underperform

Cummins Inc. (CMI) Underperform

Group 1 Automotive, Inc. (GPI) Underperform

Sonic Automotive, Inc. (SAH) Underperform

Industry Comparison Industry: Auction And Valuation Services Industry Peers

CPRT X Industry S&P 500 AN IAA RBA

Zacks Recommendation (Long Term) Neutral - - Neutral Neutral Outperform

Zacks Rank (Short Term) - -

VGM Score - -
Market Cap 32.96 B 4.09 B 31.29 B 6.63 B 5.78 B 7.05 B
# of Analysts 5 3.5 14 7 2 3
Dividend Yield 0.00% 0.85% 1.58% 0.00% 0.00% 1.70%
Value Score - -
Cash/Price 0.05 0.12 0.04 0.07 0.03 0.07
EV/EBITDA 21.00 13.31 13.82 4.57 12.57 20.89
PEG Ratio NA 3.87 2.24 1.54 NA 3.87
Price/Book (P/B) 6.79 4.18 3.24 2.94 12.46 5.69
Price/Cash Flow (P/CF) 27.08 20.19 13.12 5.62 14.12 27.84
P/E (F1) 31.03 28.97 18.10 6.77 17.29 27.07
Price/Sales (P/S) 9.20 2.86 2.66 0.25 2.72 4.27
Earnings Yield 3.24% 3.57% 5.55% 14.76% 5.78% 3.90%
Debt/Equity 0.00 0.26 0.60 1.57 2.37 0.51
Cash Flow ($/share) 2.56 2.42 8.44 23.78 3.06 2.28
Growth Score - -
Hist. EPS Growth (3-5 yrs) 26.68% 27.23% 10.58% 51.23% 30.17% 27.23%
Proj. EPS Growth (F1/F0) -1.35% 10.57% 5.98% 32.97% -4.60% 18.04%
Curr. Cash Flow Growth 19.96% 6.39% 11.61% 35.15% 41.02% -7.17%
Hist. Cash Flow Growth (3-5 yrs) 27.51% 27.63% 10.40% 21.57% NA 9.00%
Current Ratio 4.69 2.98 1.22 1.05 1.67 1.27
Debt/Capital 0.04% 16.93% 39.46% 61.04% 70.30% 33.81%
Net Margin 30.01% 16.37% 12.48% 5.50% 13.55% 18.49%
Return on Equity 23.75% 20.61% 17.94% 62.53% 76.94% 25.52%
Sales/Assets 0.67 0.58 0.55 2.90 0.67 0.50
Proj. Sales Growth (F1/F0) 6.60% 7.13% 4.35% 3.20% 13.40% 21.50%
Momentum Score - -
Daily Price Chg 0.63% 0.22% -0.88% 0.44% 0.93% 1.39%
1 Week Price Chg 2.33% 1.76% -2.35% 12.77% 3.25% 5.86%
4 Week Price Chg 10.65% 3.19% 2.47% 15.32% 9.53% 7.02%
12 Week Price Chg 7.92% 1.35% 3.42% 10.82% 8.62% 15.24%
52 Week Price Chg 7.79% -5.92% -9.38% 26.32% -5.65% 8.01%
20 Day Average Volume 1,575,010 995,021 1,917,310 663,761 2,882,943 2,005,792
(F1) EPS Est 1 week change 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
(F1) EPS Est 4 week change 0.00% 3.21% -0.25% 0.98% 0.00% 6.42%
(F1) EPS Est 12 week change -2.69% 1.87% -1.01% -2.06% 0.00% 6.42%
(Q1) EPS Est Mthly Chg 0.00% 0.00% -0.93% 1.16% 0.00% NA

Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 7 of 9
Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 8 of 9
 Zacks Stock Rating System
We offer two rating systems that take into account investors' holding horizons: Zacks Rank and Zacks Recommendation. Each provides valuable
insights into the future profitability of the stock and can be used separately or in combination with each other depending on your investment style.

Zacks Recommendation
The Zacks Recommendation aims to predict performance over the next 6 to 12 months. The foundation for the quantitatively determined Zacks
Recommendation is trends in the company's estimate revisions and earnings outlook. The Zacks Recommendation is broken down into 3 Levels;
Outperform, Neutral and Underperform. Unlike many Wall Street firms, we have an excellent balance between the number of Outperform and
Neutral recommendations. Our team of 70 analysts are fully versed in the benefits of earnings estimate revisions and how that is harnessed
through the Zacks quantitative rating system. But we have given our analysts the ability to override the Zacks Recommendation for the 1200
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management effectiveness that a trained investment professional can spot better than a quantitative model.

Zacks Rank
The Zacks Rank is our short-term rating system that is most effective over the one- to three-month holding horizon. The underlying driver for the
quantitatively-determined Zacks Rank is the same as the Zacks Recommendation, and reflects trends in earnings estimate revisions.

Zacks Style Scores Value Score

The Zacks Style Score is as a complementary indicator to the Zacks rating system, giving investors a way
Growth Score
to focus on the highest rated stocks that best fit their own stock picking preferences.
Momentum Score
Academic research has proven that stocks with the best Value, Growth and Momentum characteristics
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a rating of A, B, C, D and F. We also produce the VGM Score (V for Value, G for Growth and M for
Momentum), which combines the weighted average of the individual Style Scores into one score. This is
perfectly suited for those who want their stocks to have the best scores across the board.

As an investor, you want to buy stocks with the highest probability of success. That means buying stocks with a Zacks Recommendation of
Outperform, which also has a Style Score of an A or a B.

Disclosures
This report contains independent commentary to be used for informational purposes only. The analysts contributing to this report do
not hold any shares of this stock. The analysts contributing to this report do not serve on the board of the company that issued this
stock.The EPS and revenue forecasts are the Zacks Consensus estimates, unless indicated otherwise on the reports first page.
Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the
subject securities and issuers. ZIR certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the
specific recommendation or views expressed by the analyst in the report.

Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we
believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Any opinions expressed herein are subject to
change.

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ZIR uses the following rating system for the securities it covers. Outperform- ZIR expects that the subject company will outperform the broader
U.S. equities markets over the next six to twelve months. Neutral- ZIR expects that the company will perform in line with the broader U.S.
equities markets over the next six to twelve months. Underperform- ZIR expects the company will underperform the broader U.S. equities
markets over the next six to twelve months.

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Past performance is no guarantee of future results. Please see important disclosures and definitions at the end of this report.
Zacks Equity Research: CPRT Page 9 of 9