Speedwell Research

Junkyards, wrecked cars, a duopoly, 30% operating margins, and two self-made billionaires: this is the story of Copart. From a single salvage yard in California to a global facilitator of over 3mn vehicles sales, Copart is not just the world’s largest salvage vehicle auction marketplace, but also a critical logistics provider and large land holding company. 

Copart not only rolled up the fragmented salvage industry, but did it without any debt and innovated in the process–they literally changed the business model of how insurers handled totaled cars, and as early as 1998, were selling cars online. Founder Willis Johnson is not only an incredibly intuitive entrepreneur, defining the “job” Copart does years before Clay Christen popularized that framework, he is also an incredible operator. Despite being relatively underfunded compared to the more polished IAA, they have recently taken dominant share after a multi-decade battle.

But the battle line is moving. With the focus no longer on just North America, Copart is moving beyond–to Europe, the Middle East, and South America. Their traditional focus on totaled vehicles could also be shifting as they have started to gain more ground in the “undamaged” car space. 

Is the best of the story behind this ~250 bagger from IPO, or can new markets and higher quality supply extend their runway? What do autonomous vehicles mean for a company whose volumes increase with crashes? Will their long time competitor have a renewed focus after being acquired by Ritchie Bros, the largest marketplace for industrial & construction equipment? 

In this report, we will touch on all of that, as well as how Copart may have some of the greatest business moats of all time. With the stock compounding at ~27% over the last 5 years, what do you have to assume for a return from here? We will answer that with our TAM analysis, unit economic sketch, and reverse DCF.

You can find the following and more in our report:

1. Founding History.
2. Business History.
3. Business.
4. Industry and Auction Dynamics.
5. IAA.
6. Copart Model.
7. Copart vs IAA.
8. Beyond North America.
9. Beyond Salvage.
10. Beyond Cars.
11. ROIC and Capital Allocation.
12. Revenue Build.
13. Risks.
14. Summary Model.
    • Historical Financials
    • Financial Model.
15. Conclusion.

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