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Copart, Inc. Message Board

  • shortofaname_99 shortofaname_99 Jun 3, 2008 7:17 PM Flag

    Weak results under the surface

    EPS got a 2c boost from lower tax rate. But what caught my eye was that depreciation was $10Mn, below the $11Mn in the previous quarter. Net PP&E increased by $39Mn in the quarter, which means capex was $49Mn. I cannot understand how depreciation can decrease when capex is so high. It looks manipulated to me. From the cash balance and accounting for the buyback, free cash flow was lower this quarter than last year ($31Mn vs. $44Mn). So in the last 12 months, the co. has generated $65Mn of FCF, which means it is trading at a 60x multiple! The stock is being supported by the buyback, but in another quarter, the company will run out of cash, so it will have to halt the buyback as it is not generating much cash. I calculate fair value of the stock as $20, which would still be a 25x FCF multiple.

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