What happened

Shares of Copart Inc. (NASDAQ:CPRT) declined 19.9% in September, according to data from S&P Global Market Intelligence, after the online auto auction leader released mixed fiscal fourth-quarter results relative to expectations.

To be sure, Copart stock fell nearly 15% on Sept. 19, 2018 alone, when the company revealed its quarterly revenue had climbed 18.7% year over year to $449.2 million, which technically exceeded consensus estimates for sales of $44.2 million. On the bottom line, however, that translated to adjusted (non-GAAP) earnings of $102.6 million, or $0.42 per share, up 20% from $0.35 per share in the same year-ago period, but well below the $0.48 per share predicted by most Wall Street analysts.

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So what

To be fair, and as I noted shortly after the plunge, Copart management explained during the subsequent conference call that the company's earnings were hurt by roughly $20 million in one-time charges stemming from acquisitions and changes in accounting for depreciation and amortization. But while those charges are typically accounted for through most companies' non-GAAP adjustments, accounting rules dictated that Copart's adjusted results this quarter still include a non-cash depreciation charge of $10.5 million from "assets newly placed into service as well as changes in the useful lives of fixed assets."

"We achieved a record fourth quarter and unit sales revenue, gross profits and operating income," Copart CFO Jeff Liaw elaborated during the call. "We're quite pleased by what we believe is strong underlying operational and financial performance, but it was of course a complex quarter given certain non-recurring, non-cash charges,[...] as well as a slight mix shift to purchase cars and year-over-year changes in our tax rate."

Now what

It likely didn't help that Copart stock had climbed nearly 50% year to date leading up to last month's report, leaving some investors itching to take profits off the table at any sign of perceived weakness. But putting aside its nonrecurring charges, this was as strong a quarter as any shareholder could have hoped for. And for patient investors willing to ignore the noise, I think the stock should rebound in the coming quarters as Copart's underlying strength becomes clearer.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.