Copart (CPRT) is the world leader in salvage vehicle auctions. Its model resembles a toll booth: the company collects a fee on every vehicle that insurance companies, when repair is not economical, entrust to it to be resold at online auction (the VB3 platform).
CPRT operates within a duopoly (≈ 50% of the US market, RB Global/IAA ≈ 35%) protected by a strong, multi-layered moat: a liquidity network effect (the largest buyer base in the world attracts the best prices, and therefore more sellers), a site density that is hard to replicate (scarce land, lengthy environmental permits), and deep integration into insurers’ systems that creates high switching costs.
The long-term thesis rests on a structural tailwind: the frequency of total losses has risen from ≈ 15.6% to ≈ 24% of claims over ten years, driven by the continued rise in repair costs (electronics, ADAS, electric vehicles) and the aging of the vehicle fleet. Each percentage-point increase mechanically expands the pool of vehicles to be processed, independently of the number of accidents.
Points of strength
Exceptional economics. Gross margin ≈ 45%, operating margin ≈ 37%, net margin ≈ 33%, all remarkably stable; ROIC ≈ 30%, far above the cost of capital (≈ 9%). Revenue has grown ≈ 16% per year over eight years.
Fortress balance sheet. Virtually debt-free, ≈ $4.1bn in net cash, investments 100% in short-term US Treasuries carrying unrealized gains. The company is entirely self-financing and depends on no outside capital.
Clean accounts. Auditor in place since 2006, no “critical audit matter,” effective internal controls, no restatements, near-zero dilution (stock-based compensation ≈ 0.8% of revenue), no related parties. Owner-operator style management, aligned.
Growth drivers. International expansion (markets still embryonic outside the US/UK), development of the non-insurance “whole-car” segment and of technology services, now complemented by share buybacks.
Points of caution
DOJ investigation (money laundering). Since October 2023, the Department of Justice has been investigating Copart’s procedures for preventing money laundering by the members of its platform. The outcome cannot be quantified, no provision has been recorded (the loss is not estimable), with a risk of fines, operational constraints and reputational damage. Not a threat to solvency (strong balance sheet) but a real overhang to monitor through the coming 10-Qs.
Dependence on large insurers. No single customer accounts for more than 10% of revenue, but a handful of insurers collectively carry significant weight, under terminable contracts. Progressive is shifting its volume toward RB Global (from ≈ 75% to ≈ 90%): if the gap persists, Copart’s US share would fall from ≈ 50% to ≈ 46%. There is a risk of multi-sourcing by other insurers (a trend that is not purely cyclical).
Soft insurance volumes (cyclical). The 2023-2025 surge in premiums pushed some motorists to reduce their coverage, resulting in fewer claims being filed (US units ≈ –4%). The impact is slower growth, not a decline in profits (offset by record auction prices). It is expected to be temporary (several quarters to ≈ 1-2 years) as premiums stabilize.
Recent margin compression. Operating margin slightly down (39% → 36.5% of revenue over two years): higher site costs and overheads, partly one-off (hurricanes) and investment-related (sales force, compliance), to be watched if they persist.
Long-term disruption (beyond 10 years). Autonomous driving could reduce accident frequency. Over a 20-year horizon, the rise in the total-loss rate could offset most of this decline (slow fleet turnover), but uncertainty increases toward the end of the period. Electric vehicles, by contrast, are a net positive in the medium term (higher total-loss rate).
Conclusion
Copart is a very high-quality “compounder” – a durable moat, exceptional profitability and balance sheet, a structural tailwind – whose share price, after a correction, could once again offer a margin of safety. One could envisage holding it with a long-term “buy and hold” perspective. It is not a fast-growth stock, so the aim would be steady compounding rather than a spectacular re-rating.
Data (07/30/2026) :
Ticker symbol: CPRT (NASDAQ)
Current price: ≈ USD 29.80
Market capitalization: ≈ USD 27.8 Bn
Country of head office: United States (Dallas, Texas)
Sector: Professional Services — Salvage Vehicle Auctions
YTD performance: − 32%
1-year performance: − 39%
5-year performance: + 35% (total return)
10-year performance: + 690% (total return)
At the time of publication of this document, the author declared not holding CPRT shares.
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