Critical Review: KAR Auction Services (KAR) & Copart (CPRT)
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 institutional ownership, profitabiliy, analyst recommendations, risk, dividends, earnings and valuation.
KAR Auction Services pays an annual dividend of $1.28 per share and has a dividend yield of 3.1%. 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 raised 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||5.12||$504.25 million||$1.72||18.09|
|KAR Auction Services||$3.26 billion||1.71||$762.40 million||$1.66||24.50|
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.
This is a summary of current 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|
|KAR Auction Services||0||0||6||0||3.00|
Copart currently has a consensus price target of $52.50, indicating a potential upside of 68.70%. KAR Auction Services has a consensus price target of $54.00, indicating a potential upside of 32.78%. Given Copart’s higher probable upside, equities research analysts clearly believe Copart is more favorable than KAR Auction Services.
Insider & Institutional Ownership
40.2% of Copart shares are held by institutional investors. 17.0% of Copart shares are held by insiders. Comparatively, 1.3% of KAR Auction Services shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
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|
|KAR Auction Services||7.16%||20.54%||4.50%|
Risk and Volatility
Copart has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, KAR Auction Services has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500.
Copart beats KAR Auction Services on 11 of the 17 factors compared between the two stocks.
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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