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Category: Stock Market and Burlington
Date: 8 September 2019 Stock Price: $81.38 We take a look at the 4th quarter earnings for their 2019 fiscal year of Copart, the online vehicle auction company
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About Copart
Copart, Inc., founded in 1982, is a global leader in online vehicle auctions. Copart’s innovative technology and online auction platform links sellers to more than 750,000 Members in over 170 countries. Copart offers services to process and sell salvage and clean title vehicles to dealers, dismantlers, rebuilders, exporters, and in some cases, to end users. Copart sells vehicles on behalf of insurance companies, banks, finance companies, charities, fleet operators, dealers and also sells vehicles sourced from individual owners. With operations at over 200 locations in 11 countries, Copart has more than 125,000 vehicles available online every day. Copart currently operates in the United States (Copart.com), Canada (Copart.ca), the United Kingdom (Copart.co.uk), Brazil (Copart.com.br), the Republic of Ireland (Copart.ie), Germany (Copart.de), Finland (avk.fi), the United Arab Emirates, Oman and Bahrain (Copartmea.com), and Spain (Copart.es).
Financial overview of Copart's latest earnings report
The numbers we are interested in (for the quarter):
- Total Services and Vehicle Sales: $470.399 million (up from $391.661 million from the same quarter of the previous year)
- Total Operating Expenses : $349.773 million (up from $314.386 million for the same quarter of the previous year)
- Net income: $153.496 million (up from from $109.748 million for the same quarter of the previous year)
- Diluted earnings per share: $0.64 (up from $0.45 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 238.354 million (up from 244.406 million for the same quarter of the previous year)
- PE ratio: 32 (based on the earnings per share for the current quarter being reported for full fiscal year)
- Cash and cash equivalents: $186.319 million
- Cash and cash equivalents per share: $0.78
- Cash and cash equivalents makes up 0.9% of Copart's current market capital
- Cash and cash equivalents makes up 7.31% of Copart's total assets
- Inventories: $20.941 million (up from $16.734 million for the same quarter of the previous year)
- Inventories makes up 0.81% of Copart's total assets
- Inventories increased by 24.15% over the last year
- Total shareholders' equity of Copart.: $1.778 billion
- Shareholders' equity per share: $7.46
- Accounts receivable: $367.625 million (up from $351.601 million for the same quarter of the previous year)
- Accounts receivable makes up 14.4% of Copart's total assets
- Accounts receivable grew by 4.5% over the last year
- Cash generated from operations (for the full fiscal year): $591.693 million
- Cash generated from operations per share (for the full fiscal year): $2.48
Copart's management commentary on the results and earnings guidance
Dallas, Texas (September 4, 2019) — Copart, Inc. (NASDAQ: CPRT) today reported financial results for the quarter and year ended July 31, 2019.
For the three months ended July 31, 2019, revenue, gross profit, and net income were $542.6 million, $242.6 million, and $153.5 million, respectively. These represent an increase in revenue of $93.4 million, or 20.8%; an increase in gross profit of $54.2 million, or 28.8%; and an increase in net income of $43.7 million, or 39.9%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.64 compared to $0.45 last year, an increase of 42.2%.
For the year ended July 31, 2019, revenue, gross profit, and net income were $2.0 billion, $898.3 million, and $591.7 million, respectively. These represent an increase in revenue of $236.3 million, or 13.1%; an increase in gross profit of $136.0 million, or 17.8%; and an increase in net income of $173.8 million, or 41.6%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2019 were $2.46 compared to $1.73 last year, an increase of 42.2%.
The operating results for the year ended July 31, 2018 were adversely affected by abnormal costs of $79.7 million incurred as a result of Hurricane Harvey. These costs included temporary storage facilities; abnormally high costs for subhaulers; increased labor costs due to overtime; travel and lodging due to the reassignment of employees to the affected region; and equipment lease expenses to handle the increased volume, as well as cost of vehicle sales. These costs, net of the associated revenues of $66.9 million generated a pre-tax loss of $12.8 million for the year ended July 31, 2018.
For the three months ended July 31, 2019, revenue, gross profit, and net income were $542.6 million, $242.6 million, and $153.5 million, respectively. These represent an increase in revenue of $93.4 million, or 20.8%; an increase in gross profit of $54.2 million, or 28.8%; and an increase in net income of $43.7 million, or 39.9%, respectively, from the same period last year. Fully diluted earnings per share for the three months were $0.64 compared to $0.45 last year, an increase of 42.2%.
For the year ended July 31, 2019, revenue, gross profit, and net income were $2.0 billion, $898.3 million, and $591.7 million, respectively. These represent an increase in revenue of $236.3 million, or 13.1%; an increase in gross profit of $136.0 million, or 17.8%; and an increase in net income of $173.8 million, or 41.6%, respectively, from the same period last year. Fully diluted earnings per share for the year ended July 31, 2019 were $2.46 compared to $1.73 last year, an increase of 42.2%.
The operating results for the year ended July 31, 2018 were adversely affected by abnormal costs of $79.7 million incurred as a result of Hurricane Harvey. These costs included temporary storage facilities; abnormally high costs for subhaulers; increased labor costs due to overtime; travel and lodging due to the reassignment of employees to the affected region; and equipment lease expenses to handle the increased volume, as well as cost of vehicle sales. These costs, net of the associated revenues of $66.9 million generated a pre-tax loss of $12.8 million for the year ended July 31, 2018.
Copart (NASDAQ: CPRT) stock price history
The image below, obtained from Google, shows the stock price history of Copart (NASDAQ: CPRT) for the last 5 years. And its been a good 5 years for Copart stock holders with the stock price increasing over 380% over the last 5 years. 5 years ago the stock was trading around $16.70 and its currently trading at $81.38. Copart is also trading very close to its 52 week high of $82.32 and is far away from its 52 week low of $44.61 which is a clear indication that the short term sentiment and momentum of the stock being very positive.
Copart (NASDAQ: CPRT) latest stock valuation
So based on the latest earnings report from Copart what do we value their stock at? Our valuation models places a target price (full value price) on Copart of $53.70. We therefore believe the stock is overvalued and would not recommend that fundamental long term investors or value investors buy into Copart at its current stock price. We suggest looking to enter a stock at least 10% below our target (full value) price. This a good entry into the stock would be at levels around $47. Based on our valuation we expect the stock price of Copart to pull back to levels closer to our target price in coming weeks and months.