CPRT – Markets are pricing in expectations for Uniform ROA to remain at current levels, but management may be concerned about their costs, inventories, and the sustainability of business tailwinds

• Copart, Inc. (CPRT:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 32.3x Uniform P/E and a 26.1% Uniform ROA. At these levels, the market is pricing in expectations to remain at current levels, and management may be concerned about their costs and inventory management, and the sustainability of various business tailwinds.
  
  

• Specifically, management may have concerns about their investment in new yards and expansion projects, and about continued declines in driving activity. In addition, management may be concerned about the impact of declines in their U.S. inventory, and continued increases in their unit processing cost. Furthermore, they may lack confidence in their ability to keep their businesses open, and sustain growth in unique international bidders. Finally, they may have concerns about the volatility of their selling prices, and lower ASPs in the near-term, and they may be downplaying concerns about business tailwinds such as auction liquidity, loss frequency, car age, and car damage