Since April 2020, the S&P 500 has delivered a total return of 122%. But one standout stock has more than doubled the market - over the past five years, Copart has surged 253% to $56.82 per share. Its momentum hasn’t stopped as it’s also gained 7.9% in the last six months thanks to its solid quarterly results, beating the S&P by 9.6%.

Is now still a good time to buy CPRT? Or are investors being too optimistic? Find out in our full research report, it’s free.

Why Is Copart a Good Business?

Starting as a single salvage yard in California in 1982, Copart (NASDAQ: CPRT) operates an online auction platform that connects sellers of damaged and salvage vehicles with buyers ranging from dismantlers and rebuilders to used car dealers and exporters.

1. Skyrocketing Revenue Shows Strong Momentum

Examining a company’s long-term performance can provide clues about its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last five years, Copart grew its sales at an incredible 15.2% compounded annual growth rate. Its growth surpassed the average business services company and shows its offerings resonate with customers.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Copart’s EPS grew at an astounding 18.3% compounded annual growth rate over the last five years, higher than its 15.2% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Copart has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining an ample cushion. The company’s free cash flow margin was among the best in the business services sector, averaging 21.8% over the last five years.

Final Judgment

These are just a few reasons why we think Copart is one of the best business services companies out there, and with its shares topping the market in recent months, the stock trades at 34.6× forward price-to-earnings (or $56.82 per share). Is now the right time to buy? See for yourself in our in-depth research report, it’s free.

Stocks We Like Even More Than Copart

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

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