Is Copart Now a Long Term Opportunity After a 31% Slide in 2025?

• If you are wondering whether Copart's recent slide has turned it into a potential value opportunity, or if the market sees trouble ahead, this breakdown is for you.
• Copart is down about 0.1% over the last week, roughly 6.3% over the last month, and a steep 31.3% year to date, with the 1-year return sitting at around negative 36.8%. However, the 3- and 5-year returns are still positive at 28.1% and 26.4% respectively.
• These moves come as investors reassess the outlook for vehicle volumes, salvage prices, and the broader used car ecosystem, particularly as financing conditions and consumer demand have shifted. At the same time, Copart continues to draw attention for its dominant salvage auction platform and global footprint, which many bulls still consider a key part of the long-term investment thesis.
• In our checks, Copart scores a solid 5/6 valuation score. This suggests it screens as undervalued on most metrics, but not all. Next, we will unpack this in more detail as we compare different valuation methods and later look at a more holistic way to judge whether the stock is truly inexpensive or not.

Find out why Copart's -36.8% return over the last year is lagging behind its peers.

Approach 1: Copart Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates a company’s value by projecting the cash it can generate in the future and then discounting those cash flows back to today in dollar terms. For Copart, the 2 Stage Free Cash Flow to Equity model starts with last twelve months Free Cash Flow of about $1.30 billion and then applies analyst forecasts and longer term growth assumptions.

Analysts see Free Cash Flow reaching roughly $1.69 billion by 2028, and Simply Wall St extrapolates this out over the following years, with projected Free Cash Flow in 2035 rising to about $2.41 billion. These future cash flows are discounted to reflect risk and the time value of money, then summed to arrive at an estimated intrinsic value per share.

On this basis, Copart’s DCF fair value is calculated at around $49.05 per share, implying the stock is about 21.2% below its estimated intrinsic value. That indicates the current market price may not be fully recognizing Copart’s future cash generation potential.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Copart is undervalued by 21.2%. Track this in your watchlist or portfolio, or discover 907 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Copart.

Approach 2: Copart Price vs Earnings

For profitable companies like Copart, the Price to Earnings (PE) ratio is a useful way to judge value because it directly links what investors pay for each share to the earnings that business is currently generating. In general, faster growing and lower risk businesses tend to justify a higher, or more normal, PE ratio, while slower growth or higher risk should mean a lower one.

Copart is currently trading on a PE of about 23.5x. That is slightly below the broader Commercial Services industry average of roughly 24.6x, and well below the peer group average of around 36.1x, which at first glance suggests the stock could be inexpensive. However, simply comparing to peers can be misleading because it ignores important differences in growth, profitability and risk.

Simply Wall St addresses this through its proprietary Fair Ratio, which estimates what a reasonable PE should be after factoring in Copart’s earnings growth outlook, industry, profit margins, market cap and risk profile. For Copart, this Fair Ratio is around 28.6x, noticeably higher than the current 23.5x, which points to the market applying a discount relative to what those fundamentals might justify.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1448 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Copart Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Copart’s story with a concrete forecast for its future revenue, earnings and margins, and ultimately a fair value per share.

A Narrative is your personal, numbers backed storyline for a company, where you spell out what you think will happen to the business and then see what that implies for fair value, instead of only relying on static ratios like PE.

On Simply Wall St’s Community page, used by millions of investors, Narratives make this process accessible by tying together three pieces: the business story, the financial forecast that flows from it, and the fair value that those assumptions support.

This can help you evaluate your view on Copart by continuously comparing your Narrative Fair Value with the live market price. Because Narratives are dynamically refreshed as new earnings, news and estimates come in, you can see how fresh information may influence your thesis.

For example, one Copart Narrative might lean more optimistic and align with a higher fair value near about $65, while a more cautious Narrative could justify something closer to the lower end, around $46, reflecting different assumptions about growth, margins and risk.

Do you think there's more to the story for Copart? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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