Stock Analysis | Copart Outlook - Weak Technicals and Diverging Analyst Sentiment

1. Market Snapshot

Takeaway: Copart (CPRT.O) is facing a weak technical outlook with an internal diagnostic score of 3.61 and a recent price rise of 1.49% despite conflicting analyst expectations.

2. News Highlights

• Fuel Ethanol Market Report (May 29): A new report highlights the commercial potential of sustainable aviation fuel (SAF) derived from ethanol. While not directly related to CPRT, it reflects broader trends in energy transition that could influence logistics and supply-chain stocks.
• Gaza Aid Looting (May 31): Reports of armed individuals looting humanitarian aid in Gaza underscore global instability, which can indirectly affect multinational logistics and auto auction platforms like Copart.
• US Visa Policy for Chinese Students (May 28): The policy shift could reduce inflows of international students, potentially affecting global mobility and asset flows. This could indirectly impact Copart’s international operations.

3. Analyst Views & Fundamentals

Analyst Consensus: The simple average analyst rating for CPRT is 3.50, while the historical performance-weighted rating is 2.20. The two ratings differ significantly, indicating a lack of alignment among analysts.

• Rating Consistency: Analysts are divided, with one firm (Baird) having a strong historical record (100% win rate) and another (Stephens & Co.) with a poor track record (0% win rate).
• Price Trend Mismatch: The stock has risen 1.49% recently, but analyst expectations are relatively neutral. This divergence suggests caution around relying on analyst guidance at the moment.

Fundamental Highlights:

• Net Income / Revenue (15.05 %): Strong profit margins, with an internal diagnostic score of 3.33.
• ROE (3.42 %): Indicates solid return on equity, supported by a score of 3.53.
• Basic Earnings Per Share (YoY Growth): 13.04 %, with a score of 3.33.
• Total Profit (YoY Growth): 9.63 %, scoring 3.53.

4. Money-Flow Trends

Copart is experiencing a negative fund-flow trend, with all investor sizes (small, medium, large, and extra-large) showing outflows. The overall inflow ratio is just 44.59%, meaning that the stock is seeing more selling pressure than buying interest.

• Big-Money Influence: Large and extra-large investors, who typically move prices, are also showing outflows (inflow ratios of 49.09% and 42.50% respectively), suggesting a lack of institutional confidence.
• Retail Activity: Small retail flows are also negative, with an inflow ratio of 48.81%. This reinforces the bearish trend.

The fund-flow score is 7.51, which is considered “good,” indicating strong liquidity and price discovery. However, it contrasts with the bearish price and sentiment signals.

5. Key Technical Signals

The technical side is weak, with an internal diagnostic score of 3.61 and an overall recommendation to avoid the stock. There are currently 1 bearish indicator and 0 bullish indicators active.

• Williams %R Overbought (Score: 1.86): Suggests limited technical strength. This indicator has historically delivered an average return of -0.25% and a win rate of 43.24%.
• Bearish Engulfing (Score: 5.36): A more neutral-to-bearish signal, showing a slight positive bias. It has historically returned 0.10% on average with a 57.14% win rate.

Recent Chart Activity (Last 5 Days):

• Williams %R Overbought appeared on 8/13, 8/12, 8/6, and 8/18.
• A Bearish Engulfing pattern was recorded on 8/7.

Trend Quality: Recent signals are scarce, and the market appears to be in a volatile, directionless state.

6. Conclusion

Copart is facing a challenging near-term outlook. While fundamental performance appears solid, technical and fund-flow trends are bearish, and analyst sentiment is divergent. Investors should consider waiting for a clearer trend or a pullback before committing new capital.

Keep a close watch on the next analyst reports and potential earnings updates for signs of a turnaround.