Copart, Inc.CPRTNASDAQ

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Sell

Fair Value: $29.51 per share(market-calibrated)

-23.0%

Upside to Fair Value

Current

$38.31

Pure Model

$28.55

Fair Value

$29.51

Bull Case

$32.95

Bear Case

$24.27

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

5.97%

Calibrated Growth

3.18%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $28.55.

What's Driving This Ratingfor CPRT

↓

CapEx normalizing toward maintenance

Historical CapEx is 10.32% of revenue (heavy investment phase). Model fades this to 3.50% by Year 10, freeing up ~$419M in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 39.57% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

→

Moderate revenue growth

Analyst consensus projects -0.74% revenue growth, fading to 2.25% by Year 10. Revenue reaches $6.1B (vs $4.6B today).

🎯

Market pricing in higher long-term growth

To justify $38.31, the market implies 5.97% perpetual growth — 372bps above the model's 2.25%. This suggests the market sees additional growth catalysts (AI, new products, market expansion) not captured in analyst estimates.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 73.55% indicates efficient cash generation. FCF reaches $1.9B by Year 10 (31.72% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)1.08

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)9.37%

Cost of Debt

Pre-tax Cost of Debt7.12%

Tax Rate18.32%

After-tax Cost of Debt5.82%

Equity Weight (E/V)99.72%

Debt Weight (D/V)0.28%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (99.72% × 9.37%) + (0.28% × 5.82%)

= 9.36%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$4.6B	$5.1B	$5.5B	$5.7B	$6.1B
EBIT	$1.8B	$2.0B	$2.2B	$2.3B	$2.4B
Tax	$334M	$373M	$399M	$417M	$445M
NOPAT	$1.5B	$1.7B	$1.8B	$1.9B	$2.0B
+ Depreciation	$164M	$183M	$196M	$205M	$219M
- Capex	$476M	$453M	$401M	$332M	$215M
- Δ NWC	-$10M	$98M	$36M	$38M	$41M
Free Cash Flow	$1.2B	$1.3B	$1.5B	$1.7B	$1.9B
Discount Factor	0.914	0.765	0.639	0.534	0.409
Present Value	$1.1B	$990M	$982M	$905M	$797M

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$1.9B

Terminal Growth Rate2.25%

WACC9.36%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$28.0B

PV of Terminal Value$11.5B

Exit Multiple Method

Year 10 EBITDA$2.7B

Exit Multiple (EV/EBITDA)18.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$47.7B

PV of Terminal Value$19.5B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$9.4B

PV of Terminal Value$11.5B

Enterprise Value$20.9B

(-) Net Debt-$2.7B

Equity Value$23.5B

Shares Outstanding965M

Price per Share$24.38

Exit Multiple Method

PV of Projected FCFs$9.4B

PV of Terminal Value$19.5B

Enterprise Value$28.9B

(-) Net Debt-$2.7B

Equity Value$31.6B

Shares Outstanding965M

Price per Share$32.72

Pure Model Fair Value

$28.55

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
7.36%	$33.89	$34.67	$35.60	$36.73	$38.13
8.36%	$30.52	$31.04	$31.64	$32.36	$33.21
9.36%	$27.77	$28.14	$28.55	$29.03	$29.59
10.36%	$25.48	$25.74	$26.04	$26.38	$26.76
11.36%	$23.52	$23.72	$23.94	$24.18	$24.46

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$24.27

-36.6% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 1.35

Base Case

$28.55

-25.5% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 1.08

Bull Case

$32.95

-14.0% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.92

Key Assumptions & Drivers• Industrials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-0.74%

Year 3 Revenue Growth6.79%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin39.57%

Tax Rate18.32%

Historical Capex / Rev10.32%

Terminal Capex / Rev3.50%

NWC / Revenue30.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 18x EV/EBITDA (Industrials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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