Analyzing Copart (CPRT) and KAR Auction Services (KAR)

Copart (NASDAQ: CPRT) and KAR Auction Services (NYSE:KAR) are both mid-cap business services companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, institutional ownership, profitabiliy, dividends, analyst recommendations and valuation.

Insider & Institutional Ownership

40.3% of Copart shares are held by institutional investors. 17.0% of Copart shares are held by company insiders. Comparatively, 1.3% of KAR Auction Services shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Copart and KAR Auction Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Copart 29.10% 33.20% 16.35%
KAR Auction Services 7.16% 20.54% 4.50%

Analyst Recommendations

This is a summary of recent ratings and target prices for Copart and KAR Auction Services, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Copart 0 5 1 0 2.17
KAR Auction Services 0 0 6 0 3.00

Copart currently has a consensus target price of $52.50, suggesting a potential upside of 64.32%. KAR Auction Services has a consensus target price of $54.00, suggesting a potential upside of 27.51%. Given Copart’s higher possible upside, analysts clearly believe Copart is more favorable than KAR Auction Services.

Volatility and Risk

Copart has a beta of 1.22, indicating that its stock price is 22% more volatile than the S&P 500. Comparatively, KAR Auction Services has a beta of 1.12, indicating that its stock price is 12% more volatile than the S&P 500.

Dividends

KAR Auction Services pays an annual dividend of $1.28 per share and has a dividend yield of 3.0%. Copart does not pay a dividend. KAR Auction Services pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. KAR Auction Services has increased its dividend for 4 consecutive years.

Earnings and Valuation

This table compares Copart and KAR Auction Services’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Copart $1.40 billion 5.26 $504.25 million $1.72 18.58
KAR Auction Services $3.26 billion 1.78 $762.40 million $1.66 25.51

KAR Auction Services has higher revenue and earnings than Copart. Copart is trading at a lower price-to-earnings ratio than KAR Auction Services, indicating that it is currently the more affordable of the two stocks.

Summary

Copart beats KAR Auction Services on 11 of the 17 factors compared between the two stocks.

About Copart

Copart, Inc. (Copart) is a provider of online auctions and vehicle remarketing services in the United States, Canada, the United Kingdom, the United Arab Emirates, Oman, Bahrain, Brazil, Ireland, Spain and India. The Company also provides vehicle remarketing services in Germany. The Company operates through two segments: United States and International. The Company provides vehicle sellers with a range of services to process and sell vehicles primarily over the Internet through its virtual bidding third generation Internet auction-style sales technology (VB3). The Company’s service offerings include Online Seller Access, Salvage Estimation Services, Estimating Services, End-Of-Life Vehicle Processing, Virtual Insured Exchange (VIX), Transportation Services, Vehicle Inspection Stations, On-Demand Reporting, Department of Motor Vehicle (DMV) Processing, Flexible Vehicle Processing Programs, Buy It Now, Member Network, Sales Process, Copart Dealer Services, CashForCars.com and U-Pull-It.

About KAR Auction Services

KAR Auction Services, Inc. is a provider of whole car auction services in North America, and salvage auction services in North America and the United Kingdom. The Company operates through three segments: ADESA, Inc. (ADESA Auctions or ADESA), Insurance Auto Auctions, Inc. (IAA) and Automotive Finance Corporation (AFC). The ADESA segment is a provider of whole car auctions and related services to the vehicle remarketing industry in North America. It serves its customer base through online auctions and auction facilities that are developed and located to draw professional sellers and buyers together, and allow the buyers to inspect and compare vehicles remotely or in person. As a provider of salvage vehicle auctions and related services, it operates as IAA in the United States and Impact Auto Auctions in Canada, and serves customer base through salvage auction locations throughout North America. The AFC segment provides floorplan financing to independent used vehicle dealers.

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