How Copart’s recent earnings link to the valuation debate

Copart (CPRT) is back in focus after third quarter earnings on May 21, 2026, with investors weighing steady profit metrics against a sharp share price decline over the past year.

The company reported third quarter revenue of US$1,237.07 million and net income of US$402.4 million, alongside basic and diluted earnings per share from continuing operations of US$0.43.

At a share price of US$30.35, Copart’s short term momentum has weakened, with the share price return down 7.6% over the past week and 19.7% year to date, while the 1 year total shareholder return has declined 39.8%, which may point to fading confidence despite recent earnings stability.

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With earnings holding fairly steady and the share price down sharply, the big question now is whether Copart is quietly undervalued or if the current price already reflects the growth the market expects.

Most Popular Narrative: 31.8% Overvalued

Against the last close at $30.35, the most followed narrative pegs Copart’s fair value at $23.03, which points to a meaningful valuation gap in that framework.

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.

Want to see what kind of free cash flow runway and long term margin profile sit behind that fair value, and how the narrative handles future valuation multiples.

Result: Fair Value of $23.03 (OVERVALUED)

However, this story can be challenged if insurer relationships loosen or if the long term 36% operating margin profile proves harder to sustain.

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Another view: earnings multiple points the other way

While the most popular narrative sees Copart as 31.8% overvalued at a fair value of US$23.03, the current P/E of 18.1x tells a different story. It sits below the US Commercial Services industry at 21.3x, the peer average at 34.8x, and even the 20.1x fair ratio.

In practical terms, the market is pricing Copart at a discount to peers and below the P/E level the fair ratio suggests it could move toward. This may signal either caution about future growth or a potential opportunity if those concerns ease.

Next Steps

With sentiment split between caution and optimism, this is a useful moment to move quickly and check the numbers yourself, especially the 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.