Copart's (CPRT) Q4 Earnings Beat Estimates, Shares Rise

Copart, Inc.’s (NASDAQ:CPRT) shares gained 4.1% to close at $36.77 on Sep 21, after the company reported better-than-expected earnings and revenues. The company’s share price continued to increase, surging 5.1% in the three trading sessions since the earnings were reported.

Copart posted earnings per share (“EPS”) of 59 cents for fourth-quarter fiscal 2016 (ended Jul 31, 2016), up from 44 cents in the corresponding quarter of fiscal 2015. Moreover, EPS surpassed the Zacks Consensus Estimate of 54 cents.

Earnings for the reported quarter have been adjusted for changes in foreign currency exchange rates, and certain tax benefits along with foreign income tax credit limitations related to accounting for stock option exercises. Including these one-time items, earnings for the reported quarter amounted to 71 cents per share. Net income (on a reported basis) amounted to $84.1 million, up 46.5% year over year.

Copart’s revenues increased 17.8% to $332.7 million in the reported quarter. Further, the figure outpaced the Zacks Consensus Estimate of $318 million. Service revenues went up 18.8% to $289.5 million, while revenues from vehicle sales grew 11.8% to $43.2 million.

Gross margin improved 19.1% to $141.5 million (42.5% of sales) in the reported quarter from $118.8 million (42.1% of sales) a year ago. Operating expenses increased to $226.5 million from $195.5 million in the year-ago quarter.

Operating income rose to $106.2 million from $86.8 million in fourth-quarter fiscal 2015.

Fiscal 2016 Results

Copart reported a rise in EPS to $2.10 for fiscal 2016 from $1.67 in the prior year. The figure also exceeded the Zacks Consensus Estimate of $2.07.

Including one-time items, earnings for fiscal 2016 amounted to $2.21 per share. Net income soared 23% to $270.4 million in fiscal 2016.

Annual revenues increased 10.7% year over year to $1.27 billion, marginally surpassing the Zacks Consensus Estimate of $1.25 billion.

Financial Details

Copart had cash and cash equivalents of $155.8 million as of Jul 31, 2016, compared with $456 million as of Jul 31, 2015. Total debt and capital lease obligations amounted to $640.5 million as of Jul 31, 2016, compared with $644.5 million as of Jul 31, 2015.

During fiscal 2016, Copart generated net cash flow of $332.5 million from operations, compared with $265.1 million in the same period a year ago. Capital spending was $173.9 million, compared with $79.2 million in fiscal 2015.

Copart is a prominent player in online auctions and vehicle remarketing services in the U.S., Canada, U.K., UAE, Bahrain, India, Sultanate of Oman, Spain, Brazil, Germany, and the Republic of Ireland. Its peers in the auction and valuations services business include Sotheby's (NYSE:BID) , Ritchie Bros. Auctioneers Incorporated (NYSE:RBA) and Liquidity Services, Inc. (NASDAQ:LQDT) .

The company provides a wide range of remarketing services to process and sell salvage and clean title vehicles. This is done mainly over the Internet, through its Virtual Bidding Third Generation (VB3) Internet auction-style sales technology. It has a Zacks Rank #2 (Buy), You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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