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At US$78.00, Is It Time To Put Copart, Inc. (NASDAQ:CPRT) On Your Watch List?

Copart, Inc. (NASDAQ:CPRT) received a lot of attention from a substantial price increase on the NASDAQGS over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, could the stock still be trading at a relatively cheap price? Let’s examine Copart’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

View our latest analysis for Copart

Is Copart still cheap?

According to my valuation model, Copart seems to be fairly priced at around 6.7% below my intrinsic value, which means if you buy Copart today, you’d be paying a reasonable price for it. And if you believe that the stock is really worth $83.56, then there’s not much of an upside to gain from mispricing. So, is there another chance to buy low in the future? Given that Copart’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Copart generate?

NasdaqGS:CPRT Past and Future Earnings May 5th 2020
NasdaqGS:CPRT Past and Future Earnings May 5th 2020

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -7.5% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Copart. This certainty tips the risk-return scale towards higher risk.

What this means for you:

Are you a shareholder? Currently, CPRT appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

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Are you a potential investor? If you’ve been keeping an eye on CPRT for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. Furthermore, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CPRT should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Copart. You can find everything you need to know about Copart in the latest infographic research report. If you are no longer interested in Copart, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.