Yahoo Finance Factors at Play Ahead of Copart's (CPRT) Q3 Earnings Release
Copart, Inc. CPRT is set to release third-quarter fiscal 2023 results on May 17, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings per share and revenues is 62 cents and $1.01 billion, respectively.
The Zacks Consensus Estimate for quarterly revenues indicates a 7.7% rise year over year. The Zacks Consensus Estimate for fiscal third-quarter earnings has remained stable over the past 30 days. The bottom-line forecast calls for an increase of 5.08% year over year.
In the last reported quarter, this Texas-based online vehicle auctioning company topped earnings estimates on higher-than-anticipated service revenues. The bottom line also increased 10.9% year over year. Over the trailing four quarters, Copart surpassed the Zacks Consensus Estimate thrice and missed once, the average surprise being 2.01%.
Copart, Inc. Price and EPS Surprise
Copart, Inc. price-eps-surprise | Copart, Inc. Quote
Things to Consider
Salvage auction volumes are likely to have remained elevated amid increased vehicle miles traveled and higher collision frequency. Additionally, aging vehicles and technologically-advanced auto parts might positively impact Copart’s results. The costs of replacing such sophisticated components are extremely high, prompting insurance agencies to declare the vehicles as total loss. An expected increase in total loss rates is expected to have aided Copart’s top line.
Copart’s active presence in the United States and international markets is likely to have bolstered the firm’s performance in the to-be-reported quarter. The Zacks Consensus Estimate for service revenues is pegged at $814 million, indicating an uptick of 6.2% year over year. Also, the consensus mark for vehicle sales is $185 million, implying a rise from $174 million reported in the prior-year quarter.
On the flip side, rising operating expenses and high storage and labor costs are expected to have dented margins. Operating costs have also been on the rise since several quarters amid increasing G&A expenditure. In the last reported quarter, the company’s G&A expenditure increased 11.9% year over year. The trend is likely to have continued in the to-be-reported quarter as well, thereby denting margins.
Also, increased investments due to business expansion are likely to have clipped Copart’s bottom line to some extent. The company has been doubling down on storage-capacity expansion. In the first and second quarters of fiscal 2023, capex amounted to $257 million (up from $157 million in the comparable year-ago quarters), 80% of which was related to capacity expansion. Copart’s continued efforts to prioritize expansion are likely to have clipped cash flows.
What the Zacks Model Says
Our proven model does not conclusively predict an earnings beat for Copart this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here.
Earnings ESP: It has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate of earnings is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Copart currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Release
KAR Auctions Services Inc. KAR came out with first-quarter 2023 on May 2. It reported quarterly earnings of 12 cents per share, beating the Zacks Consensus Estimate of 9 cents. In the year-ago period, the company had incurred a loss of 2 cents per share. In the last four quarters, the company surpassed the consensus estimate twice for as many misses.
KAR posted revenues of $420.6 million for the quarter ended March 2023, surpassing the Zacks Consensus Estimate by 8.36%. This compares to the year-ago revenues of $369.4 million. The company topped revenue estimates three times in the last four quarters and matched on the other occasion.
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