Apr. 9 at 1:02 PM
$CPRT Copart is one of the most quietly brilliant businesses of the last decade.
Free cash flow per share has compounded at +31% annually since 2016, a total increase of +1,330%. The stock followed: +551% over the same period.
The business model is great:
- Irreplaceable land network (250+ locations, 11 countries)
- ~33% net margins with zero debt
-
$5.1B in cash earning interest while they wait
- Rising total-loss rates (now 22.8%) are a structural tailwind
However, the stock is now down ~39% from highs (not on business quality deteriorating, but on a cyclical dip in insurance volumes).
Modern cars are getting more expensive to repair (ADAS sensors, EV batteries, etc.). That means more totals. That means more volume for Copart.
Mr. Market occasionally offers you great businesses at fair prices. This might be one of those moments.
