In light of the recent stabilization in used vehicle pricing and the Manheim Index trends through early 2026, how is Copart's salvage volume being impacted by the structural rise in total loss frequencies for high-tech and electric vehicles?

The analysis of Copart, Inc. (CPRT) in the context of early 2026 market dynamics reveals a complex interplay between stabilizing used vehicle values and structural shifts in automotive technology. While the Manheim Used Vehicle Value Index (MUVVI) has shown signs of stabilization and a seasonal "spring bounce," Copart’s salvage volumes are increasingly dictated by the rising complexity and repair costs associated with electric vehicles (EVs) and high-tech internal combustion engine (ICE) models. 📊 Manheim Index Trends & Used Vehicle Pricing (Early 2026) As of mid-February 2026, the wholesale used vehicle market has exhibited a notable stabilization following years of post-pandemic volatility. Index Performance: The MUVVI rose to 210.5 in January 2026, a 2.4% increase month-over-month, driven by strong retail demand and record-high tax refunds. By mid-February, the index moderated slightly to 210.0 , yet remained 2.9% higher than February 2025 levels. Segment Divergence: Luxury vehicles and non-EVs have led price growth, while the EV Index saw more modest gains of 0.8% year-over-year. Implications for Salvage: Historically, higher used vehicle values (Actual Cash Value or ACV) raise the "total loss threshold," potentially reducing salvage supply. However, this effect is currently being neutralized by the rapid escalation in repair severity. 🚗 Structural Rise in Total Loss Frequencies Despite the stabilization in ACVs, total loss frequencies have reached historic highs, fundamentally altering the supply pipeline for salvage auctioneers like Copart. Record Frequencies: Total loss frequency in the U.S. reached an all-time high of 23.8% in late 2025, with the full-year 2025 average at 22.2% . The EV/High-Tech Factor: EVs and vehicles equipped with Advanced Driver Assistance Systems (ADAS) are significantly more likely to be "totaled" due to: Repair Severity: EV repair costs are typically 20% to 30% higher than traditional ICE vehicles, largely due to battery pack sensitivity and specialized labor requirements. Component Interconnectivity: High-tech sensors and lightweight materials (e.g., aluminum, carbon fiber) often require full replacement rather than repair, pushing estimates past the economic total loss threshold. EV Total Loss Rates: EV total loss frequency rose to 10.7% in early 2025, a 33% increase from 2023, as used EV values depreciated faster than their ICE counterparts. 🏦 Copart (CPRT) Financial Performance & Volume Impact Copart’s recent financial results reflect a transition period where pricing power and structural tailwinds are battling near-term volume headwinds. Q2 2026 Results (Ended Jan 31, 2026): Revenue: $1.12B (down 3.6% YoY) Net Income: $350.7M (down 9.5% YoY) EPS: $0.36 (vs. $0.40 in Q2 2025) Volume vs. Pricing: Global unit volumes declined approximately 5-6% in recent quarters, partly due to a reduction in catastrophic (CAT) weather events compared to the prior year. However, Copart has maintained strong margins through record-high Average Selling Prices (ASPs). U.S. insurance ASPs rose 8.4% YoY in Q1 FY26, supported by a global buyer base that pays a 38% premium over domestic bidders. 🔍 Risks & Strategic Outlook The primary risk to Copart's volume growth is "consumer retrenchment"—a trend where rising insurance premiums lead drivers to opt for higher deductibles or drop collision coverage entirely, reducing the number of claims processed through the insurance channel. However, the structural shift toward higher total loss frequency remains the dominant long-term catalyst. As the vehicle "car parc" continues to age and incorporate more expensive electronics, the economic viability of repairing even minor collisions diminishes. For Copart, this ensures a steady long-term expansion of the salvage pool, even if used car prices remain elevated in the near term.

Following the severe winter weather events across North America in early 2026, what has been the impact on Copart’s inventory processing capacity and have the associated towing and storage costs pressured operating margins in the most recent reporting period?

Following the severe winter weather events in North America during early 2026—most notably Winter Storm Fern in January—Copart (CPRT) experienced significant operational disruptions and financial pressure. While these events typically serve as long-term volume catalysts for the salvage industry, the immediate impact on the most recent reporting period (Fiscal Q2 2026, ended January 31, 2026) was characterized by temporary capacity constraints and margin compression. Financial Performance Overview (Q2 2026) Copart’s fiscal second-quarter results reflected the immediate logistical challenges posed by the extreme weather. The company reported a year-over-year decline across key profitability metrics as the costs of responding to the storms preceded the revenue from the resulting vehicle auctions. Total Revenue: $1.121B (a decrease of -3.6% YoY) Gross Profit: $492.8M (a decrease of -6.2% YoY) Net Income: $350.7M (a decrease of -9.5% YoY) Diluted EPS: $0.36 (compared to $0.40 in the prior year period) Impact on Inventory Processing Capacity The severe ice and snow across more than 30 states forced temporary closures and delayed openings at numerous Copart facilities in late January 2026. Operational Bottlenecks: Yard closures and hazardous road conditions directly impacted "pickup appointments" and the intake of new salvage inventory. While Copart’s VB3 digital platform remained functional, the physical processing of vehicles—including title procurement, imaging, and lot placement—was slowed by labor shortages and inaccessible infrastructure. Strategic Capacity: Management noted that Copart’s long-term strategy of owning its land (rather than leasing) provided a "capacity buffer" that allowed it to absorb the sudden influx of total-loss vehicles once yards reopened. However, the immediate "cycle time" (the duration from vehicle assignment to auction) was extended, deferring revenue into the subsequent quarter. Towing and Storage Cost Pressures Operating margins were pressured by a spike in "facility operations" expenses, which encompass the logistics of recovering vehicles in extreme conditions. Towing Logistics: The demand for heavy-duty towing surged following the storms. Copart often incurs higher third-party towing fees during such events to ensure rapid recovery for insurance partners, which directly impacts the cost of service. Storage and Preparation: Incremental costs were associated with preparing yards for extreme ice and snow, as well as the administrative burden of managing a backlog of vehicles. These "front-loaded" costs were recognized in Q2, while the commission and fee revenue from these units will not be realized until the vehicles are sold, typically 45–60 days post-intake. Margin Compression: The global gross margin was impacted by these rising operational costs and a slight decline in unit volume during the quarter, as the "Storm Fern" units had not yet reached the auction block by the January 31 reporting cutoff. Outlook and Transmission Mechanism The financial "unpleasantness" of Q2 is viewed by analysts as a timing issue rather than a structural decline. The severe weather is expected to act as a tailwind for Fiscal Q3 2026, as the record number of vehicles totaled during the January storms move through the processing pipeline and onto the auction platform. Historically, such "generational" weather events lead to higher average selling prices (ASPs) and increased buyer competition as inventory supply eventually catches up with global demand.

Given Copart’s strategic focus on international expansion, what specific progress has been made in the German and Middle Eastern markets this quarter to shift insurance carriers toward the digital auction model, and how is this affecting the company's global Average Selling Price (ASP)?

In the second quarter of fiscal 2026, Copart (CPRT) continued its strategic pivot in international markets, transitioning from traditional salvage valuation models toward its proprietary digital auction platform. This shift is particularly evident in Germany and the Middle East, where the company is leveraging its technology to improve recovery values for insurance carriers, thereby supporting global Average Selling Prices (ASP) despite broader volume headwinds. Strategic Progress in Germany: From Valuation to Auction Germany represents a critical frontier for Copart’s digital model. Historically, the German market relied on a "valuation-only" system (exemplified by Copart’s WOM platform), where salvage values were estimated but vehicles were not necessarily auctioned through a centralized digital marketplace. Model Shift: Copart is actively moving German insurance carriers toward a "Market Value Regulation" model. In this framework, Copart manages the entire disposal process, placing vehicles on its global digital auction platform rather than just providing a price estimate. Infrastructure Expansion: The company now operates 13 facilities in Germany, including a major 22-acre site in Berlin. This physical footprint is essential for the "full-service" digital model, allowing Copart to store and process vehicles directly. Value Recovery: Internal estimates and market analysis suggest that shifting to the digital auction model in Germany can yield salvage values 10% to 20% higher than traditional methods, providing a compelling incentive for carrier adoption. Middle Eastern Market: Digital Transformation via Partnerships In the Middle East, specifically the UAE, Oman, and Bahrain, Copart has accelerated the adoption of its "digitally automated auction services" through high-profile strategic agreements. Carrier Adoption: This quarter and recent periods have seen major partnerships with regional leaders, including Union Insurance and Insurance House. These agreements involve the end-to-end digital management of salvage inventory, replacing manual or fragmented disposal processes. Buyer Liquidity: Copart’s Middle Eastern operations now serve over 10,000 registered buyers. The integration of these carriers into the digital platform allows for immediate access to this liquidity, driving competitive bidding and higher returns for insurers. Impact on Global Average Selling Price (ASP) The international expansion is a primary tailwind for Copart’s global ASP, acting as a buffer against domestic U.S. market fluctuations. International Buyer Premium: Management noted that international buyers typically purchase vehicles at values 38% higher than comparable U.S. buyers. As more international inventory (from Germany and the Middle East) is funneled into the global digital pool, it attracts these high-value bidders. ASP Growth Metrics: In the most recent reporting cycles, global insurance ASPs increased 6.8% , while U.S. insurance ASPs rose 8.4% . The continued shift toward digital auctions in high-value markets like Germany is a key driver of this sustained pricing power. Revenue Normalization: For Q2 FY2026, Copart reported revenue of $1.1B , a -3.6% year-over-year decline. This was largely attributed to the non-recurrence of catastrophic (CAT) events in the prior year, but the underlying ASP strength remains a core fundamental pillar. Risks and Operational Considerations CAT Volatility: Year-over-year comparisons remain sensitive to catastrophic weather events. The absence of major flooding in Germany and the Middle East this quarter led to a volume decline compared to the prior year's elevated levels. Adoption Inertia: While the digital model offers higher returns, shifting conservative European insurance carriers away from established valuation practices remains a long-term educational and operational challenge. Currency Fluctuations: As international revenue grows, Copart faces increased exposure to Euro and AED exchange rate volatility, which can impact consolidated financial reporting.

Copart, Inc. (CPRT) Stock Price & AI Analysis

GoAI Score

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Valuation

50Fair Value

Sentiment

100Bullish

Risk

77Low Risk

Momentum

10Negative

Institutional-Grade Intelligence

🏆PRO

Actionable Intelligence

AI-driven stance, execution logic & risk thresholds

Catalyst Roadmap

Event timeline with expected impact & market context

Deep Insights

Fact-checked analysis & score logic breakdown

Financial Statements

Margin Trends

Gross

45.2%▲0.2pp

Revenue after COGS

Operating

36.5%▼0.6pp

After operating expenses

Net

33.4%▲1.2pp

Bottom-line profitability

Gross Margin

Operating Margin

Net Margin

Valuation Snapshot

P/E Ratio

28.2

Price vs earnings

EV/EBITDA

19.5

Enterprise value

FCF Yield

2.8%

Cash generation

Earnings Yield

3.5%

Inverse of P/E

Capital Efficiency

15

GoAI Quality ScoreStrong

ROEReturn on Equity

16.9%Strong

ROAReturn on Assets

15.4%Strong

ROICReturn on Invested Capital

14.7%Strong

Financial Health

Current RatioHealthy

8.25

Short-term solvency (>1.5)

Net Debt / EBITDANet Cash

-1.27x

Debt repayment capacity (<3x)

Income QualityStrong

1.16

Cash backs earnings (>1)

Revenue & Profitability

Revenue

Net Income

Net Loss

Income Statement

Metric	FY2025	FY2024	FY2023	FY2022	FY2021
Revenue	$4.65B	$4.24B	$3.87B	$3.50B	$2.69B
Gross Profit	$2.10B	$1.91B	$1.74B	$1.61B	$1.34B
Gross Margin	45.2%	45.0%	44.9%	45.9%	49.9%
Operating Income	$1.70B	$1.57B	$1.49B	$1.37B	$1.14B
Net Income	$1.55B	$1.36B	$1.24B	$1.09B	$936.50M
Net Margin	33.4%	32.2%	32.0%	31.1%	34.8%
EPS	$1.61	$1.42	$1.30	$1.15	$0.99

Average Price Target

$47.67▲ 30.7% Upside

Past 12 Months

12 Month Forecast

Based on 50 Wall Street analysts offering 12 month price targets for Copart, Inc., the average price target is $47.67, with a high forecast of $62.00 and a low forecast of $33.00. The average price target represents a 30.7% increase from the current price of $36.48.

Highest

$62.00

Average

$47.67

Lowest

$33.00

Rating Distribution

Strong Buy

0

0%

Buy

10

53%

Hold

8

42%

Sell

1

5%

Strong Sell

0

0%

Recent Analyst Ratings

FirmActionRatingDate

Baird● Maintain

Outperform

2026-02-20

JP Morgan● Maintain

Neutral

2025-11-24

Barclays● Maintain

Underweight

2025-11-21

Baird● Maintain

Outperform

2025-11-21

Stephens & Co.● Maintain

Equal Weight

2025-09-05

HSBC▲ Upgrade

Hold→Buy

2025-09-04

Baird● Maintain

Outperform

2025-07-17

JP Morgan● Maintain

Neutral

2025-05-23

Baird● Maintain

Outperform

2025-02-21

JP Morgan● Maintain

Neutral

2024-11-19

Earnings History & Surprises

BEAT RATE

61%

Last 18 quarters

AVG SURPRISE

+3.0%

EPS vs Estimate

BEATS / MISSES

11/4

3 met exactly

LATEST EPS

$0.36

Q1 '26

QUARTERLY EPS TREND

Estimated

Beat

Miss

QUARTERLY DETAIL

Q1 '26

-8.3%

$0.36 vs $0.39

Q4 '25

+5.2%

$0.41 vs $0.39

Q3 '25

+13.5%

$0.41 vs $0.36

Q2 '25

+0.8%

$0.42 vs $0.42

Q1 '25

+7.6%

$0.40 vs $0.37

Q4 '24

$0.37 vs $0.37

Q3 '24

-8.3%

$0.33 vs $0.36

Q2 '24

$0.39 vs $0.39

Q1 '24

-5.7%

$0.33 vs $0.35

Q4 '23

+3.0%

$0.34 vs $0.33

Q3 '23

+6.3%

$0.34 vs $0.32

Q2 '23

+16.1%

$0.36 vs $0.31

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