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How Does Copart Inc’s (NASDAQ:CPRT) Earnings Growth Stack Up Against Industry Performance?

Assessing Copart Inc’s (NASDAQ:CPRT) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess CPRT’s recent performance announced on 31 July 2018 and evaluate these figures to its longer term trend and industry movements.

See our latest analysis for Copart

How Did CPRT’s Recent Performance Stack Up Against Its Past?

CPRT’s trailing twelve-month earnings (from 31 July 2018) of US$418m has increased by 6.0% compared to the previous year.

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However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 20%, indicating the rate at which CPRT is growing has slowed down. Why could this be happening? Well, let’s examine what’s transpiring with margins and if the entire industry is feeling the heat.

NasdaqGS:CPRT Income Statement Export November 21st 18
NasdaqGS:CPRT Income Statement Export November 21st 18

In terms of returns from investment, Copart has invested its equity funds well leading to a 26% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 19% exceeds the US Commercial Services industry of 7.5%, indicating Copart has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Copart’s debt level, has increased over the past 3 years from 22% to 32%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 51% to 25% over the past 5 years.

What does this mean?

Copart’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Copart gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research Copart to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CPRT’s future growth? Take a look at our free research report of analyst consensus for CPRT’s outlook.

  2. Financial Health: Are CPRT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 July 2018. This may not be consistent with full year annual report figures.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.