Copart (CPRT) Down 11.4% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for Copart (CPRT). Shares have lost about 11.4% in that time frame, underperforming the S&P 500.

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

Copart Q4 Earnings Miss Estimates, Revenues Beat

Copart reported adjusted earnings per share of 42 cents in fourth-quarter fiscal 2018 (ended Jul 31, 2018), missing the Zacks Consensus Estimate of 47 cents. The bottom line improved 20% from 35 cents recorded in the year-ago quarter.

Net income was $109.7 million, reflecting a surge of 56% or $39.4 million from fourth-quarter fiscal 2017.

Copart’s revenues rose 18.7% to $449.2 million from the year-ago quarter and surpassed the Zacks Consensus Estimate of $446.4 million. Service revenues went up 16% year over year to $391.7 million while revenues from vehicle sales gained 38% to $56.6 million in comparison with the prior-year quarter.

Gross profit improved 13% to $188.4 million from $167.5 million a year ago. Total operating expenses increased to $314.4 million from $267.8 million recorded in the prior-year period.

Operating income increased to $134.8 million from $110.8 million a year ago.

For fiscal 2018, Copart has reported adjusted earnings per share of $1.73, up from the prior-year figure of $1.29. In fiscal 2018, revenues were $1.8 billion, up from the 2017 figure of $1.5 billion.

Financial Details

Copart had cash and cash equivalents of $274.5 million as of Jul 31, 2018, compared with $210 million as of Jul 31, 2017. Long-term debt, revolving loan facility and capital lease obligations were $398.7 million as of Jul 31, 2018, which recorded a decline from $550.8 million as of Jul 31, 2017.

In fiscal 2018, Copart generated net cash flow of $535.1 million from operations compared with $ 492.1 million in fiscal 2017.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

At this time, Copart has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Following the exact same course, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

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

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