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Does Copart, Inc.'s (NASDAQ:CPRT) 42% Earnings Growth Make It An Outperformer?

Simply Wall St

For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Copart, Inc.'s (NasdaqGS:CPRT) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.

See our latest analysis for Copart

How Did CPRT's Recent Performance Stack Up Against Its Past?

CPRT's trailing twelve-month earnings (from 31 July 2019) of US$592m has jumped 42% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 22%, indicating the rate at which CPRT is growing has accelerated. What's enabled this growth? Let's see if it is solely due to industry tailwinds, or if Copart has experienced some company-specific growth.

NasdaqGS:CPRT Income Statement, October 20th 2019

In terms of returns from investment, Copart has invested its equity funds well leading to a 33% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 24% exceeds the US Commercial Services industry of 6.6%, indicating Copart has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Copart’s debt level, has increased over the past 3 years from 30% to 32%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 30% to 23% over the past 5 years.

What does this mean?

Though Copart's past data is helpful, it is only one aspect of my investment thesis. While Copart has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. You should continue to research Copart to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for CPRT’s future growth? Take a look at our free research report of analyst consensus for CPRT’s outlook.
  2. Financial Health: Are CPRT’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 31 July 2019. This may not be consistent with full year annual report figures.

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.

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. Thank you for reading.