Stock Analysis | Copart Outlook - Mixed Signals as Technicals Weigh on Momentum

1. Market Snapshot

Takeaway: Copart (CPRT) is showing a recent price rise of 4.80%, but the technical outlook remains weak with a low internal diagnostic score (0-10) of 2.97. Analysts have been sparse, with a single "Strong Buy" rating from HSBC, though historical performance of that firm is mixed.

2. News Highlights

Recent global news includes:

• North Korea's military advancements with Russian backing are raising concerns over regional security, which could indirectly affect trade and market sentiment.
• Increased oil supplies from Russia to Syria are signaling a strategic shift, potentially impacting energy prices and global trade dynamics.
• Record ETF assets in Asia Pacific hit $1.25 trillion, indicating strong investor confidence in passive strategies, though this is more a sector trend than a direct factor for Copart.

3. Analyst Views & Fundamentals

Analysts have been limited in their coverage of Copart, with only one active rating in the last 20 days from HSBC’s Wesley Brooks, who gave a “Strong Buy” on September 4. However, this firm's historical performance shows a 0.00% average return and 0.00% win rate over the past 20 days.

The simple average rating is 5.00, while the weighted average rating is 0.00, indicating significant inconsistency and poor alignment with the current price trend of a 4.80% rise.

Key fundamental metrics:

• Return on Equity (ROE) (diluted): 4.64%, with an internal diagnostic score of 3.00.
• Return on Assets (ROA): 4.21%, with a score of 3.00.
• Net Income to Revenue: 11.16%, score: 3.00.
• Profit-MV: 1.39, score: 3.00, suggesting strong earnings relative to market value.
• Interest Coverage Ratio: -89.64% (negative value indicates coverage issues), with an internal diagnostic score of 2.00.

While Copart shows strength in earnings and equity returns, the negative interest coverage ratio is a red flag and points to potential liquidity concerns.

4. Money-Flow Trends

Big-money investors are not currently bullish on Copart, with overall inflow ratio at 48.96% and all categories (small, medium, large, extra-large) showing a negative trend. The internal diagnostic score (0-10) for fund flows is 7.56, indicating decent overall liquidity but a clear bearish tilt from major players.

5. Key Technical Signals

Technical indicators for Copart show a weak trend with the internal diagnostic score (0-10) of 2.97. The top signal is Williams %R overbought, with an internal score of 1.88, indicating caution is warranted. A Shooting Star pattern emerged on August 20, with a stronger internal score of 4.06, but it has not driven a reversal.

Over the last five days, the WR Overbought signal has appeared on four of five days, suggesting the stock may be due for a correction.

6. Conclusion

Copart is showing some fundamental resilience, but technical and fund-flow signals are bearish. With an internal diagnostic score (0-10) of 2.97, it's a stock to approach with caution. Investors may want to consider waiting for a pull-back or clearer momentum signals before entering. Keep an eye on the next earnings report and any shifts in the interest coverage and leverage ratios for further clarity on Copart’s financial health.