Why Copart Stock Tumbled on Earnings Today - The Unpacked Reality

Copart's earnings report just hit—and so did the sell-off. Investors aren't holding back.

Behind the Numbers Dive

Revenue missed. Guidance softened. Margins got squeezed. The street’s reacting like it’s 2008 all over again.

Earnings Day Blues

Traders dumped shares minutes after the open. No surprise—when earnings flop, algos don’t ask questions.

Big Picture or Big Problem?

One bad quarter doesn’t wreck a business—unless you’re a momentum trader with a two-second attention span. Classic finance: overreact first, think never.

Where’s the Bottom?

Nobody knows. But if you believe in the company, red days are entry opportunities—not exit signals.

Image source: Getty Images.

Copart Q4 earnings

These were anything but bad numbers. Copart grew its sales a solid 5% year over year, while increasing profits 24%. However, in the context of a strong fiscal 2025, the sales number may have disappointed investors regardless.

Total sales growth for the full year approached 10%, so the Q4 growth rate slowed by half. On the plus side, earnings for the full year -- $1.59 per share -- grew only 14% in comparison to fiscal 2024. The Q4 profits growth was much stronger than seen earlier in the year.

Is Copart stock a buy?

Even so, it's hard to argue Copart stock is much of a buy at present. Priced at 33 times earnings, the annual growth rate of 14% looks too slow to justify the stock's valuation. Worse, free cash FLOW at the company is only $1.2 billion, or roughly 20% less than reported earnings.

Valued on free cash flow, that means Copart is selling for closer to a 40x multiple. Even were Copart able to maintain the growth rate seen in Q4, that WOULD be expensive. But in fact, most analysts who follow the stock agree Copart's long-term growth rate is going to be closer to what we saw over the rest of fiscal 2025 -- about 13%.

At its current price, Copart simply costs too much.