CPRT: High-Quality Watch - Monthly signal soon?Copart, Inc.BATS:CPRTstouflacrucoCPRT has fallen from roughly $64 to around $29.60, a drawdown of approximately 54% from its 2025 peak. For a company with Copart’s historical profitability, network effects and long-term growth record, that correction is significant. But unlike some of the stronger setups recently appearing in the scanner, the monthly reversal is not ready yet. The Master Buy Scanner V2 currently says: NO BUY — WAIT. Master Buy Scanner V2 — Monthly Score: 2/3 Signal timeframe: 1M → 1M / 3W Timeframe confidence: 1M OK Action: WAIT Decision: WAIT BUY state: NO EVENT Entry quality: OK — 50% Setup maturity: LATE Position size: NONE — 0% Top recent: YES WT cross: NO Band 1: RED Combined: GREEN 5/10 Bands synchronized: NO Cycle: ACTIVE Bars since BUY: Never WT1 / WT2: -54.42 / -49.33 Momentum is extremely depressed, with WT1 already below WT2 near the scanner’s lower boundary. But the critical confirmation is missing. There is no bullish WT cross, Band 1 remains red and the bands are not synchronized. The Combined signal has improved to 5/10 green, but that alone is not enough. So despite the large drawdown, the scanner still recommends 0% position size. The business remains very strong Copart operates online auctions primarily for salvage and total-loss vehicles supplied by insurance companies, dealers, rental fleets and other sellers. Its competitive advantage is difficult to replicate: physical yard infrastructure, insurer relationships, a global buyer base and its online auction platform all reinforce one another. And the latest numbers do not suggest that the underlying business is collapsing. In fiscal Q3 2026: Revenue reached $1.24B, +2.1% Gross profit increased 3.7% Diluted EPS increased 2.4% Net income was roughly flat, down 1% For the first nine months of FY2026, revenue was essentially flat while net income remained slightly positive year over year. That is slower growth than investors became accustomed to—but very different from a fundamental deterioration. International growth is becoming increasingly important The geographic split is particularly interesting. During Q3, U.S. service revenue declined 0.4%, mainly because of lower volume. International service revenue, however, increased 17.9%, supported by both higher volume and higher revenue per vehicle. Even after adjusting for currency movements, international operations remained a meaningful source of growth. This supports the longer-term thesis that Copart can continue replicating its auction model internationally. The risk is that markets outside the U.S., Canada and U.K. do not necessarily operate like the mature U.S. salvage market. Copart itself notes that insurer participation and vehicle-disposal practices differ materially across countries. Margins remain exceptional This is one of the strongest parts of the thesis. Copart generated an operating margin of approximately 38% in Q3, versus 37% a year earlier. For the first nine months of FY2026, operating margin was approximately 37%, compared with 36% in the prior-year period. That is remarkable profitability for a business combining software, logistics, land and physical vehicle processing. The scanner reflects this: Business quality: GREEN Quality score: 2.5/3 — 83% Return on capital: 18.38% — GREEN Margin trend: -0.59% — ORANGE Profitability: 18.58% Cash-generation measure: 26.49% The slightly negative margin trend prevents a perfect score, but overall business quality remains high. The balance sheet is another major strength The scanner shows debt-to-equity of only 0.01, meaning leverage is essentially negligible. Copart also continues generating substantial operating cash flow. Through the first nine months of FY2026, operating cash flow was approximately $1.25 billion. That gives the company flexibility to: Acquire additional land Expand existing yards Invest in technology Enter new markets Repurchase shares This is important because physical capacity itself acts as part of Copart’s moat. Building a competing national network of appropriately located salvage yards would require substantial capital, regulatory approvals and time. Valuation is better — but not extremely cheap The scanner gives CPRT a solid 5.5/7 valuation score: Cash yield: 4.79% — ORANGE Business-price multiple: 14.14 — ORANGE Cash-flow multiple: 22.04 — ORANGE Earnings multiple: 18.48 — GREEN Profit/share: $1.61 — GREEN Debt-to-equity: 0.01 — GREEN After a 50%+ decline, valuation is clearly more attractive. But this is not the same deep-value setup seen in something like Adobe or NICE. At around 18x the scanner’s earnings measure and 22x cash flow, investors are still paying for Copart’s quality, resilience and long-term growth potential. The current price therefore looks reasonable rather than distressed. The growth slowdown explains the derating The scanner gives growth 3/4: Future profit growth: -0.49% — RED Estimate trend: +2.16% — GREEN Three-year profit growth: 12.01% — GREEN Three-year sales growth: 9.9% — GREEN Historically, Copart has been an excellent compounder. The issue today is that near-term growth has slowed substantially. Fiscal Q3 revenue grew only 2%, while nine-month revenue was essentially flat. Some of that comparison was affected by hurricane-related revenue in the previous year, particularly Hurricanes Helene and Milton. Nevertheless, the market wants evidence that Copart can return toward its historical growth profile. That is probably the biggest fundamental catalyst required for a sustainable rerating. Key technical levels Immediate support: $28–$30 Major support: $25–$27 First resistance: $32–$34 Initial confirmation: $36–$38 Major resistance: $40–$42 Structural recovery zone: $46–$50 Previous highs: approximately $62–$64 The current $28–$30 region is interesting because momentum is already extremely depressed. But I would want to see the monthly WT cross form and Band 1 turn green before treating this as a genuine BUY setup. A reclaim of $32–$34 alongside scanner synchronization would materially improve the signal. My classification: HIGH-QUALITY WATCH CPRT offers: Strong 18%+ return on capital Exceptional operating margins Minimal leverage Strong cash generation A difficult-to-replicate physical and digital network Growing international operations A substantially improved valuation Deeply depressed monthly momentum But the scanner is still missing several critical pieces: Only 2/3 score No BUY event No WT cross Band 1 RED Bands not synchronized Position size 0% Near-term earnings growth remains weak This looks like a company I would very much want on the watchlist—but the price being down 54% is not enough by itself to make it a BUY. Current verdict: WATCH — wait for the monthly reversal to confirm. What would you do? A) Start a small position around $30 B) Wait for the scanner BUY signal C) Wait for a recovery above $34 Master Buy Scanner V2: This is not financial advice. Technical signals can fail, and even high-quality compounders can continue falling when earnings growth and valuation expectations reset.