Here's Why We Expect Q1 Earnings Beat From Copart (CPRT)

Copart, Inc. CPRT is set to release first-quarter fiscal 2023 results on Nov 16, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings per share and revenues is 55 cents and $884.5 million, respectively.

The Zacks Consensus Estimate for quarterly revenues indicates a 9.2% rise year over year. The Zacks Consensus Estimate for fiscal first-quarter earnings has remained stable over the past 90 days. The bottom-line forecast calls for an increase of 1.8% year over year.

In the last reported quarter, this Texas-based online vehicle auctioning company posted earnings beat on higher-than-expected revenues from vehicle sales. The bottom line also edged up 9.7% year over year. Copart surpassed the Zacks Consensus Estimate in the trailing four quarters, with the average being 5.1%.

Copart, Inc. Price and EPS Surprise

Copart, Inc. price-eps-surprise | Copart, Inc. Quote

Factors at Play

Salvage auction volumes are likely to have remained elevated amid increased vehicle miles traveled and higher collision frequency. Additionally, aging vehicles and technologically-advanced auto parts may have also positively impacted Copart’s results. The costs of replacing such sophisticated components are extremely high, prompting insurance agencies to declare the vehicles as total loss. An expected increase in total loss rates is expected to have aided Copart’s top line. 

Copart’s active presence in the United States and international markets is likely to have bolstered the firm’s performance during the to-be-reported quarter. The Zacks Consensus Estimate for service revenues is pegged at $729 million, indicating an uptick of 9.1% year over year. Also, the consensus mark for vehicle sales is $164 million, calling for a rise from $142 million reported in the prior-year quarter.

Copart’s buyout of Kentucky-based online auctioning platform, Vincent Auto Solutions, strengthened its footprint in Western Kentucky and is likely to have contributed to sales during the quarter to be reported.  The launch of Copart Max has stepped up its digital game. Robust demand for vehicle remarketing services and higher average selling prices from international online bidders are expected to reflect positively on its upcoming results.

Yet, rising operating expenses and high storage and labor costs are expected to have dented margins. Also, increased investments due to business expansion are likely to have clipped Copart’s bottom line to some extent.

What the Zacks Model Says

Our proven model predicts an earnings beat for Copart this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: It has an Earnings ESP of +2.05%. This is because the Most Accurate Estimate of earnings is pegged a penny higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Copart currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Copart’s peers include KAR Auctions Services Inc. KAR and Insurance Auto Auctions, aka IAA, Inc. IAA.

KAR Auctions reported third-quarter 2022 results on Nov 1. It posted adjusted earnings of 5 cents a share, which missed the Zacks Consensus Estimate of 15 cents and declined from the year-ago earnings of 8 cents. The company posted revenues of $393 million for the quarter ended September 2022, missing the Zacks Consensus Estimate by 0.01%. This compares to the year-ago revenues of $535.2 million.

Over the last four quarters, KAR missed earnings estimates thrice while beating on the other occasion, the average negative surprise being 52.5%. The Zacks Consensus Estimate for KAR Auction’s 2022 earnings and sales estimates imply a year-over-year decline of 62% and 33%, respectively.

Insurance Auto reported third-quarter fiscal 2022 results on Nov 7. It came out with quarterly earnings of 45 cents per share, missing the Zacks Consensus Estimate of 51 cents and declining from 52 cents a year ago. However, revenues of $497.5 million for the quarter ended October 2022 surpassed the Zacks Consensus Estimate by 3.56% and rose from $420.7 million recorded in the year-ago period.

Over the last four quarters, IAA beat the earnings estimates thrice and missed on the other occasion, the average surprise being 6.4%. The Zacks Consensus Estimate for IAA 2022 earnings implies a year-over-year decline of 3%, while that for sales indicates year-over-year growth of 13%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.