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Factors Shaping the Fate of Copart's (CPRT) Q2 Earnings

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Copart, Inc. (CPRT - Free Report) is scheduled to release second-quarter fiscal 2021 results today after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings per share and revenues is pinned at 79 cents and $630.64 million, respectively.

In the last reported quarter, the Texas-based online vehicle auctioning company posted an earnings beat on higher-than-expected revenues from vehicle sales. The bottom line also improved year over year on higher revenues and lower operating costs.

Copart — which is considered the eBay (EBAY - Free Report) of salvage vehicles — surpassed the Zacks Consensus Estimate in three of the last four quarters and missed in the other, the average surprise being 20.51%. This is depicted in the graph below:

Copart, Inc. Price and EPS Surprise

Copart, Inc. Price and EPS Surprise

Copart, Inc. price-eps-surprise | Copart, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for revenues indicates a 9.65% rise from the $575.14 million recorded in the prior-year quarter. The Zacks Consensus Estimate for fiscal second-quarter earnings has remained unchanged in the past 60 days. The bottom-line forecast calls for an increase of 21.54% year over year.

What the Zacks Model Says

Our proven Zacks 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. However, that is not the case here as elaborated below.

Earnings ESP: Copart has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par 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 — peers of which include KAR Auctions Services Inc. (KAR - Free Report) and Insurance Auto Auctions aka IAA, Inc. (IAA - Free Report) — currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let's delve deeper into the factors that are likely to have influenced Copart’s fiscal second-quarter performance.

Factors at Play

Copart’s active presence in the United States and international markets is likely to have bolstered the firm’s performance during the to-be-reported quarter.

Notably, for the January-end quarter, the Zacks Consensus Estimate for service revenues is pegged at $558 million, indicating an uptick of 9.4% year over year. Also, the consensus mark for the vehicle sales is pinned at $69 million, calling for a rise from the $65 million reported in the prior-year quarter.

The company’s strategic acquisitions are also likely to have fueled revenues. Copart’s buyout of Kentucky-based online auctioning platform, Vincent Auto Solutions, has strengthened its footprint in Western Kentucky and is likely to have contributed to sales during the quarter to be reported.

Moreover, expansion efforts and digital ramp-up are likely to have fueled Copart’s revenues in the November-January period. During the quarter, the company opened four international buyer lounges in Minsk, Belarus; San Salvador, El Salvador; Odesa, Ukraine and Lekki Lagos, Nigeria. These new lounges give international buyers the opportunity to bid on and purchase Copart vehicles. While such expansion efforts are likely to have aided the company’s revenues during the to-be-reported quarter, these also require heavy investments which might have clipped the firm’s margins to some extent.

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