Last update on 2024-06-06

Copart (CPRT) - Piotroski F-Score Analysis for Year 2023 (Final Score: 5/9)

Analyze Copart's (CPRT) 2023 Piotroski F-Score of 5/9, detailing profitability, liquidity, and operating efficiency. Understand Copart's financial health.

Short Analysis - Piotroski Score: 5

We're running Copart (CPRT) against the Piotroski 9-criteria scoring system to assess profitability, liquidity, and operating efficiency:

The Piotroski F-Score is a measure between 0 to 9 to gauge a company's financial health based on profitability, liquidity, and leverage criteria. Copart (CPRT) has been analyzed based on these criteria and received a Piotroski F-Score of 5 out of 9. The company shows strong profitability with positive net income and cash flow from operations, and its operating cash flow is higher than net income. However, its return on assets declined, and leverage increased slightly. The current ratio shows improved liquidity, although there was a minor increase in outstanding shares. Copart's gross margin and asset turnover ratio both declined, reflecting reduced efficiency.

Insights for Value Investors Seeking Stable Income

Copart's F-Score of 5 suggests it is financially stable with some strong points in profitability and liquidity, but there are areas of concern, particularly in asset utilization and operating efficiency. For investors, Copart could be worth considering, especially if further investigation confirms its profitability trends and liquidity strength outweigh temporary inefficiencies. As always, it's good practice to look at broader market conditions and any specific company risks before investing.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Profitability of Copart (CPRT)

Company has a positive net income?

Positive net income reflects the company's ability to generate profits, indicating efficient management and strong financial health.

In 2023, Copart reported a net income of $1,237,741,000, which is unequivocally positive. This marks a continuation of their sustained profitability trend, as illustrated by the net income data over the past 20 years. Starting at $57,222,200 in 2003 and rising almost consistently every year, Copart's net income has grown exponentially, especially notable from 2016 onwards, reflecting robust growth and operational efficiency. Therefore, for 2023, Copart earns 1 point under the Piotroski criterion for positive net income, further solidifying its financial stability and continuous growth trend.

Company has a positive cash flow?

Cash Flow from Operations (CFO) refers to the amount of cash generated by a company's regular business operations. It's crucial for assessing the company’s ability to generate sufficient cash to maintain and grow its operations.

The CFO for Copart (CPRT) in 2023 was $1,364,210,000, which is positive. This indicates that the company is generating substantial cash from its core business activities. If we examine the historical CFO data over the past 20 years, there is a clear upward trend. For instance, in 2003, the CFO was $79,079,900 and it has increased significantly each year, reaching the current level of over $1.36 billion. This consistency in positive and growing CFO underscores the company’s robust operational efficiency and its increasing ability to generate cash flow, which is favorable for investors. Hence, this criterion earns Copart one point.

Return on Assets (ROA) are growing?

Return on Assets (ROA) gauges the efficiency of a company's management in using its assets to generate earnings. An increase in ROA indicates better utilization of assets.

Copart's ROA decreased from 0.2209 in 2022 to 0.2055 in 2023. This decline suggests a slight reduction in the efficiency of asset utilization. Given the Piotroski criteria, this would result in a score of 0, indicating it didn't meet the favorable condition. Despite this decrease, Copart's ROA remains competitive when compared to the industry median ROA of 0.2903 in 2023. Still, the declining trend shouldn't be overlooked as it could point to underlying operational issues or market conditions affecting asset profitability.

Operating Cashflow are higher than Netincome?

Operating Cash Flow higher than Net Income evaluates the company's ability to generate sufficient cash to meet its obligations. Cash flow is less susceptible to accounting adjustments compared to net income, hence it better reflects the company's financial health.

For 2023, Copart's (CPRT) Operating Cash Flow was $1,364,210,000, exceeding its Net Income of $1,237,741,000. This is a positive sign and merits an addition of 1 point according to the Piotroski Analysis criteria. Over the past 20 years, the Operating Cash Flow generally has shown an upward trend, which corroborates a robust operational efficiency and indicates that the company consistently generates ample cash to cover its net income and potentially reinvest in its business.

Liquidity of Copart (CPRT)

Leverage is declining?

Explain the criterion for Copart (CPRT) and why it is important to consider

Leverage is essential to observe as it gives insight into the company's debt levels relative to equity. A lower leverage ratio denotes less debt, which is typically favorable as it implies that the company is less dependent on borrowed capital. In the case of Copart, the leverage ratio stood at 0.0184 in 2022 and has marginally increased to 0.0147 in 2023. This trend is unfavorable, earning a score of 0, as increased leverage indicates higher debt levels.

Current Ratio is growing?

The current ratio, which consists of current assets divided by current liabilities, gauges a company's capacity to meet short-term obligations using its short-term assets. A ratio over 1 indicates more assets than liabilities, with higher numbers signifying greater liquidity.

Copart's current ratio has increased from 4.9955 in 2022 to 6.621 in 2023, demonstrating an improvement in liquidity position and adding 1 point according to the Piotroski criteria. This enhanced liquidity provides better coverage against short-term liabilities. Over 20 years, Copart's ratios have mostly hovered around 2, with a significant boost above industry medians; notably, in post-recession periods (2009). This recent increase surpasses previous highs, marking a favorable liquidity trend.

Number of shares not diluted?

The Change in Shares Outstanding reflects how the number of shares issued by a company changes over time. An increase in the number of shares might signal dilution.

In 2022, the Outstanding Shares were 949,676,000, compared to 953,574,000 in 2023. This represents an increase in shares outstanding. Therefore, the score for this criterion would be 0. Evaluating the historical data since 2003, it is evident that Copart has experienced fluctuations in its number of outstanding shares, notably shrinking in 2011 and surging in 2020, followed by moderate changes towards 2023. This increase suggests potential recent equity raising or stock-based compensations, which might dilute existing shareholders' value temporarily.

Operating of Copart (CPRT)

Cross Margin is growing?

Explain the criterion for Copart (CPRT) and why it is important to consider

The GP for FY2023 declined to 0.4489 as opposed to 0.4588 in FY2022, indicating a slight reduction in profitability. Trends over the last two decades reveal varied margins, with a peak of 0.4988 in 2021. Generally, Copart has outperformed the industry median most years, though 2023's margin underscores a downturn. Hence, this criterion scores a 0.

Asset Turnover Ratio is growing?

Asset Turnover gauges a company's effectiveness in utilizing its assets to generate revenue. Higher values can indicate improved operational efficiency.

In 2023, Copart (CPRT) reported an Asset Turnover of 0.6424 compared to 0.7093 in 2022, reflecting a decline. Despite a drop from the previous year's figure, it's worth noting that this metric has fluctuated over the last 20 years, reaching as high as 0.8418 in 2018. This decrease is concerning as it suggests reduced efficiency in asset utilization. As a result, the score for this criterion is 0.