I've been researching Copart (CPRT) after its \~46% decline from the highs.
The two biggest concerns appear to be:
• Market share pressure following RB Global's acquisition of IAA, with some insurers reportedly moving towards multi-vendor relationships.
• The recent CEO transition, which has also prompted several plaintiffs' firms to announce investigations into potential securities law violations.
Despite this, Copart now trades at roughly 17x trailing earnings versus a five-year average of around 32x, while still generating exceptionally high returns on invested capital and maintaining a substantial net cash position.
The key question is whether the recent slowdown represents a temporary setback or a structural deterioration in its competitive position. If it's the latter, today's valuation could be justified. If not, the market may be overly pessimistic.
I've written up my research covering the competitive dynamics, valuation (DCF, peer multiples and historical P/E), and principal risks for anyone interested:
[link to post](https://substack.com/@doveresearch/note/p-208439627?r=8ldxxk&utm_medium=ios&utm_source=notes-share-action)
I'd be interested to hear whether others think the competitive threat from RB Global is structural or whether the current valuation has become overly discounted.
