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Why Is Copart (CPRT) Down 6.1% Since Last Earnings Report?

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A month has gone by since the last earnings report for Copart (CPRT). Shares have lost about 6.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Copart due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Copart Q1 Earnings & Revenues Drive Past Estimates

Copart reported adjusted earnings per share of 47 cents in first-quarter fiscal 2019 (ended Oct 31, 2018), beating the Zacks Consensus Estimate of 46 cents. In the year-ago quarter, the bottom line was 33 cents.

Net income was $114.1 million, reflecting an increase of 47.2% or $36.6 million from first-quarter fiscal 2018.

Copart's revenues rose 10.1% to $461.4 million from the year-ago quarter and surpassed the Zacks Consensus Estimate of $459 million. Compared with the prior-year quarter, service revenues increased to $394.8 million from $374.1 million. Revenues from vehicle sales were $66.6 million in comparison with $45 million in the first quarter of fiscal 2018.

Gross profit improved 20% to $195.9 million from $163.3 million a year ago. Total operating expenses increased to $310 million from $295.2 million recorded in the prior-year period.

Operating income increased to $151.4 million from $124 million a year ago.

Financial Details

Copart had cash and cash equivalents of $320.3 million as of Oct 31, 2018, compared with $274.5 million as of Jul 31, 2018. Long-term debt, revolving loan facility and capital lease obligations were $398.6 million as of Oct 31, 2018, similar to the figure recorded on Jul 31, 2018.

At the end of three months of fiscal 2019, Copart generated net cash flow of $107.7 million from operations compared with $93.4 million in the year-ago period.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Copart has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Copart has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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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.


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

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