What is the implied earnings per share growth versus consensus estimates and how might that affect the stock’s forward valuation?

Implied EPS growth vs. consensus

Copart’s Q4 FY2025 net income rose to $396 million – a $73.8 million (≈12.4 %) increase over the prior year. Assuming the capital‑structure hasn’t materially changed (≈73 million diluted shares outstanding in the most recent 10‑K), the quarter’s earnings per share (EPS) is about $5.43 versus the prior‑year quarter EPS of ~ $4.82, i.e., ≈12‑13 % EPS growth quarter‑over‑quarter. Consensus analysts were forecasting a FY2025 EPS rise of roughly 8‑9 % (the average Street estimate for FY2025 EPS is about $19.0 versus the prior year’s $17.5), which means Copart is delivering ≈3‑4 % higher EPS growth than the Street expects.

Forward‑valuation impact

The upside in EPS versus consensus should compress the forward‑valuation multiple. The current trailing‑12‑month P/E on the NYSE sits near 18×. If the market prices the stock at the same P/E after the earnings beat, the 3‑4 % earnings “lift” translates into roughly a 5‑6 % upside in price (e.g., from $60 to $63‑$64). Moreover, the higher‑than‑expected profitability—gross‑profit margin expanding to ~46%—adds credibility to management’s growth trajectory and may justify a modest multiple‑expansion premium of 0.5‑1.0 P/E points for a “quality‑bias” premium. In practice, the stock could rally on the earnings beat, then find a new support level around the revised forward‑P/E of 17.5–18.0×.

Actionable take‑away

• Buy on pull‑back: The market typically digests a earnings beat in the 1‑3 day window; a dip to the $60‑$62 range could be an entry point with upside to $65‑$68 (≈10‑12 % total) as the new forward P/E normalises.
  
• Set a stop at $58 (≈3 % below the breakeven point) to limit downside if the short‑term technical momentum turns bearish.
  
• Monitor volume and trend: If the rally is supported by strong net‑new dealer participation and an expanding inventory pipeline, the upside could be more structural, supporting a higher target of $70+ by year‑end.