Renaissance Investment Management recently exited its position in Copart (CPRT), citing deteriorating fundamentals as rising automotive insurance costs lead some consumers to drop collision coverage and reduce the supply of damaged vehicles entering Copart’s auctions.

Despite the recent exit by Renaissance Investment Management, Copart’s share price has softened, with the 30 day share price return down 12.12% and the year to date share price return down 19.96%, while the 1 year total shareholder return is down 36.98%. This suggests momentum has been fading over both shorter and longer horizons.

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With Copart’s share price under pressure and several valuation models flagging a discount to estimated fair value, the key question now is whether you are looking at a genuine mispricing or a stock that already reflects its future growth.

Most Popular Narrative: 31.3% Overvalued

According to Esteban’s widely followed narrative, Copart’s fair value is set at $23.03 per share, which sits well below the recent $30.23 close. This frames the current debate around whether the market is paying too much for a strong underlying business.

Copart is a compounding machine wearing the clothes of a salvage yard. It has built the only infrastructure on earth, a two-sided digital marketplace spanning 1M+ registered buyers in 190+ countries, anchored by owned physical storage across 21,000+ irreplaceable acres, capable of converting an insurance industry's inconvenient problem (the totaled car) into global liquidity at scale. The business earns 36% operating margins on a fee-based model that carries zero inventory risk, compounds FCF at 20%+ over a decade, and operates counter-cyclically: recessions raise total-loss frequency as repair costs rise relative to vehicle values.

If you want to understand why this narrative still lands on an overvaluation call, focus on the tension between high margins, strong cash generation and the assumed long runway that underpins that $23.03 figure. The fair value hinges on how long those economics can compound at the rates baked into the model, and what kind of exit multiple Copart can realistically support a decade from now.

Result: Fair Value of $23.03 (OVERVALUED)

However, Copart’s narrative could be tested if insurance partners change how they handle total loss vehicles or if vehicle volumes in its auctions remain structurally lower.

Another View on Copart’s Valuation

While Esteban’s narrative points to Copart being overvalued at a fair value of $23.03 per share, the SWS DCF model tells a different story, with an estimated future cash flow value of $38.93 versus the current $30.23 price, implying the stock is trading at a discount. Which version of fair value do you put more weight on?

Next Steps

Feeling uncertain about where Copart really stands after these mixed signals? Take a closer look at the underlying data, then weigh what matters most to you with 4 key rewards

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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.