A family affair - the group is chaired by its founder Willis Johnson and co-managed by his son-in-law Jay Adair, who together own 10% of the capital - Copart delivered a performance in line with previous years, with sales growth of 9.5% and a corresponding increase in earnings per share.
The balance sheet continues to improve. As the Group - which acts as an agent between insurance companies and accident vehicle repossessors - does not distribute its profits, they pile up on the balance sheet. The net cash position stood at $2.4 billion at the end of last year; it is now approaching $3.5 billion, a gain equivalent to the entire free cash flow generated in twelve months.
Regularity, discipline and ubiquity: Copart's recipe continues to hit the mark, both in terms of the quality of its relationships with insurers and its economic performance. Loyal MarketScreener readers will remember that the group's shares joined our US portfolio at the start of 2019, just as its ambitious expansion strategy in Europe was getting underway.
Its business model is - or was - typical of the opportunities traditionally favored in our quantitative selections. Over the previous ten-year cycle, sales quadrupled, net income increased sixfold, and operating margins hovered around 40%.
At the same time, growth remained largely organic and self-financed, while return on equity hovered around 30% without recourse to leverage. If Copart had to be measured against the criteria of the perfect listed company, it would probably tick all the boxes.
Reflecting these qualities, the stock was trading at between x20 and x40 earnings. Its valuation is well on the way to reaching this ceiling, at a time when growth may be starting to slow, due to the mass effect. Nevertheless, as MarketScreener analysts have repeatedly emphasized over the past few years, any downturn should remain an opportunity to be exploited.