What Happened?
Shares of online vehicle auction company Copart (NASDAQ: CPRT) fell 3.5% in the morning session after the company reported fourth-quarter financial results that fell short of Wall Street's expectations for both revenue and earnings.
The online vehicle auction company announced revenue of $1.12 billion, a 3.6% year-on-year decline that missed analyst forecasts. Earnings per share also disappointed, coming in at $0.36, which was 7.5% below the consensus estimate. Furthermore, the company's profitability took a hit as its operating margin fell to 34.7% from 36.6% in the same period last year. Adjusted EBITDA of $434.9 million also came in 9.2% below expectations. Overall, the weak results, characterized by misses on key top and bottom-line metrics and shrinking margins, prompted a negative reaction from investors.
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What Is The Market Telling Us
Copart’s shares are not very volatile and have only had 3 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock gained 2.6% on the news that the latest Consumer Price Index (CPI) report came in softer than anticipated, fueling investor optimism for interest rate cuts by the Federal Reserve.
The U.S. Bureau of Labor Statistics reported that prices rose 0.2% from December to January, below the 0.3% forecast. On an annual basis, inflation moderated to 2.4%, under the expected 2.5%. This cooling trend has significant implications for monetary policy, with investors now increasing bets on multiple rate reductions by the end of the year. The news prompted a rally in both stocks and Treasuries, as lower interest rates typically reduce borrowing costs for companies and can stimulate economic activity. The Russell 2000 index, which consists of smaller companies sensitive to domestic economic conditions and financial costs, saw a particularly strong positive reaction.
Copart is down 4% since the beginning of the year, and at $36.25 per share, it is trading 43.2% below its 52-week high of $63.84 from May 2025. Investors who bought $1,000 worth of Copart’s shares 5 years ago would now be looking at an investment worth $1,289.
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