After a multiyear run-up, Copart (CPRT 0.40%) shares have fallen from grace in 2025. The salvage-auction leader's stock is trading about 30% below its 52-week high as investors digest softer trends in the auto ecosystem and a reset in expectations. Copart's marketplace connects insurers, finance companies, fleets, and others with a global buyer base -- and it tends to thrive when total losses are plentiful and used-vehicle values are supportive.
But does the pullback create an attractive entry point for investors who have had to watch from the sidelines for years as the stock moved violently up and to the right? The business remains high quality, but near-term dynamics look murky. The decision isn't easy.
Image source: Getty Images.
Recent results show pressure and slower growth
Copart's latest earnings report (fiscal Q4 ended July 31) was solid on the surface: Revenue rose 5% year over year to about $1.13 billion, with gross profit up 12% and earnings per share up 24%. For the full year, revenue grew nearly 10% to $4.65 billion and earnings per share increased 14% to $1.59. Those are healthy figures for a mature leader.
Under the hood, though, momentum cooled versus earlier in the year. In the third quarter (ended April 30), revenue climbed 7.5%. The fourth quarter's 5% top-line growth, therefore, marked a deceleration. Service revenues -- the core of Copart's model -- still grew 7% in Q4, but vehicle sales fell 4%, reflecting a tougher pricing and volume backdrop.
Management commentary also pointed to mixed signals. "Total loss frequency for the second calendar quarter of 2025 was 22.2%, up from 21.5% in the same quarter in 2024," CEO Jeff Liaw said on the September earnings call. That helps Copart because more totaled cars generally means more units for auction. But other factors offset this tailwind. CCC Intelligent Solutions' Crash Course data shows used-vehicle values drifting lower year over year into the spring, while claim counts and repair-shop dynamics have been volatile. These crosscurrents can pressure both seller behavior and fee growth.
The investment case hinges on the next upcycle (and the price you pay)
Copart is one of the market's better business models: a two-sided marketplace with global liquidity, network advantages from land capacity and dense logistics, and structurally high returns on invested capital. Over the course of a full economic cycle, this has translated into steady growth and strong cash generation.
The trouble is that the path from here is unclear. If auto sales stay soft, miles driven could level off, used-vehicle values may slip further, and insurers might generate fewer total-loss cars than investors hope. And, looking longer term, advances in driver-assist and self-driving technology could gradually reduce crash frequency and lengthen vehicle lifecycles -- which would dampen the industry's natural unit growth. To be fair, technology has also tended to raise repair complexity and costs, which can increase total-loss frequency; recent data points to that effect. But the balance of these forces is uncertain.
The stock's valuation leaves room (but not a lot) for disappointment. Using the company's reported full-year earnings per share of $1.59 and a recent share price around $45, Copart trades near 28 times earnings. That multiple is not extravagant for a capital-light marketplace with global reach, yet it is hardly a bargain when growth is slowing and industry dynamics are unsettled. If the recovery in unit volumes and pricing proves sluggish, today's price could translate into mediocre returns.
But none of this diminishes Copart's long-term appeal. The company's land bank, international expansion, and operational advantages should support solid growth through cycles. But investors do not need to rush. Shares could get cheaper if macro and industry data remains choppy, or if another quarter shows only modest progress. Waiting for either a lower entry price or clearer evidence that growth is reaccelerating (for instance, faster service-revenue growth and improving sequential trends) is probably wise.
Copart remains a fantastic business. Given the year's sell-off, it is getting closer to interesting.
