Copart (CPRT) Up 11.9% Since Earnings Report: Can It Continue?

It has been about a month since the last earnings report for Copart, Inc. CPRT. Shares have added about 11.9% in that time frame, outperforming the market.

Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Copart Q4 Earnings & Revenues Beat Estimates, Up Y/Y

Copart reported adjusted earnings per share of 35 cents in fourth-quarter fiscal 2017 (ended Jul 31, 2017) and beat the Zacks Consensus Estimate of 31 cents. The figure shows a steep rise of 20.7% from 29 cents recorded in the year-ago quarter.

Net income was $70.3 million, reflecting a decrease of 16.4% or $13.8 million from the fourth quarter of fiscal 2016.

Copart’s revenues rose 13.8% to $378.6 million from the year-ago quarter and surpassed the Zacks Consensus Estimate of $355.5 million. Service revenues went up 16.3% to $336.8 million, while revenues from vehicle sales declined 3.2% to $41.8 million.

Gross margin improved 18.4% to $167.5 million in the reported quarter from $141.5 million, a year ago. Operating expenses also increased to $267.8 million from $226.5 million, recorded in the year-ago quarter.

Operating income shot up to $110.8 million from $106.2 million, reported a year ago.

Fiscal 2017 Results

Copart reported a rise in EPS to $1.66 for fiscal 2017 from $1.11 in the previous year. The figure also exceeded the Zacks Consensus Estimate of $1.26.

Annual revenues increased 14.2% year over year to $1.4 billion, almost in line with the Zacks Consensus Estimate.

Financial Details

Copart had cash and cash equivalents of $210.1 million as of Jul 31, 2017 compared with $155.8 million as of Jul 31, 2016. Total debt, revolving loan facility and capital lease obligations declined to $550.8 million as of Jul 31, 2017 compared with $564.3 million as of Jul 31, 2016.

In fiscal 2017, Copart generated net cash flow of $492.2 million from operations compared with $332.5 million a year ago.

How Have Estimates Been Moving Since Then?

Following the release, investors have witnessed a downward trend in fresh estimates. There have been three revisions lower for the current quarter. In the past month, the consensus estimate has shifted down by 20.4% due to these changes.

Copart, Inc. Price and Consensus

 

Copart, Inc. Price and Consensus | Copart, Inc. Quote

 

VGM Scores

At this time, the stock has a great Growth Score of A, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.

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