Copart, Inc. (CPRT)

FY2025 revenue grew ~12% to approximately $4.5B, driven by increasing total loss volume, higher average selling prices, and international expansion. This significantly outpaces the broader auto services sector. The only comparable competitor (IAA/RB Global) grows slower due to integration distractions post-merger.

Copart holds ~40-45% of the US salvage vehicle auction market in a duopoly with IAA. Market share has been gradually expanding as Copart invests in land and technology while IAA integrates with RB Global. International expansion into Germany, Spain, Finland, and the Middle East is opening new markets with limited competition.

Moderate pricing power. Copart earns fees from both sellers (insurance companies) and buyers (dismantlers, rebuilders, exporters). Insurance company contracts are long-term but competitive, and the duopoly structure limits aggressive pricing. Buyer fees have more upside as the international buyer base expands.

Copart's VB3 technology platform and mobile app improve buyer experience and auction efficiency. The company is expanding into non-insurance channels (dealer consignment, fleet dispositions, specialty vehicles) which diversify the revenue base. Innovation is steady but not revolutionary — this is a process optimization business.

Insurance companies integrate Copart into their total-loss claims workflow — adjusters, tow dispatching, title processing, and auction logistics are deeply embedded. Switching would require parallel systems during migration, retraining thousands of adjusters, and risking delays in claims processing. The operational risk of switching is enormous.

Strong two-sided marketplace network effects. More vehicles on the platform attract more buyers (over 750,000 registered buyers in 190+ countries), which drives higher auction prices, which attracts more insurance company volume. International buyer demand is particularly valuable as it increases realizations on US salvage vehicles.

Zoning regulations for salvage yards are increasingly restrictive — NIMBYism makes it nearly impossible to open new salvage storage locations near major metro areas. Copart's existing land bank of 300+ locations on 10,000+ acres would take decades and billions to replicate, even if zoning permitted it.

Copart's decision to own rather than lease land is a counter-intuitive capital allocation masterstroke. The land appreciates over time while competitors face lease escalations. The company generates 40%+ operating margins and converts nearly all earnings to free cash flow. The owned-land model is the ultimate capital intensity advantage.

FY2026 EPS estimates have been revised up ~6-8% on stronger-than-expected volume and ASP trends. The revision trend is positive but modest, reflecting the predictable nature of the business. Catastrophic weather events (hurricanes, hail) create intermittent upside surprises.

Copart flies under the radar — it's not a sexy business, which actually benefits patient investors. The 'total loss frequency secular trend' narrative is well understood by institutional investors. No meaningful negative narratives, though the stock occasionally sells off on weather-driven volume timing.

Founder Jay Adair (now Executive Chairman) and CEO Jeff Liaw have been outstanding operators. The land acquisition strategy, international expansion, and technology investments demonstrate long-term thinking. Share buybacks are opportunistic. The only criticism: the company could be more aggressive on capital returns given the cash generation.