Copart reported mostly in-line F2Q results on 2/19 after market with total revenue slightly below the street but services revenue beating consensus. EBIT slightly missed street estimates, with EPS missing by a penny. Shares were down 7% vs. flattish for the S&P 500.
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With concerns over the Coronavirus spreading, we think US Retailers will likely be viewed as near-term relative safe-haven stocks given limited direct exposure to China. However, should the virus spread into a pandemic, especially in China, we see a greater impact to US retailers from indirect supply chain exposure or US GDP growth.
To help gear up for 2020 we analyzed 2019 performance, identified 10 key themes into 2020, analyzed post Q3 earnings reaction, and analyzed the key issue facing each stock under coverage into 2020.
The timing of CPRT’s capex surge is bullish for industry growth and can likely be used as a risk factor for IAA bears to point to as a sign that CPRT is adding excess capacity under the premise of capturing more Geico business in the future. To provide some historical context, we show LTM capex against Yard additions, Indexed volume, and yard operation costs. While this could be a near-term margin pressure to CPRT as these yards are put into service, empirically the yard costs are more stable than Capex.
Today (10/07/19) we are assuming broader coverage of hardlines and internet retail with deep-dive reports on four companies, including a LOW downgrade to PP. We also have two ratings changes from our existing retail coverage (AAP to UP and ORLY to OP), and assuming coverage of six additional retail names with concise 1-page investment tear sheets.
Copart reported FQ4 ‘19 results with total revenue of $543m above Cons. $525m & our $539m. Adj. EPS of $0.60 was above Cons. $0.58 & our $0.59. Shares were up 6.5% vs. +1.3% for the S&P 500.
Copart reported FQ3 ‘19 results this morning. Total revenue of $553m was above Cons. $536m & our $528m. Adj. EPS of $0.66 was above Cons. $0.62 & our $0.60. Shares were up 6% vs. -1.5% for the S&P 500.
We wanted to flag a few highlights in today's (05/22/19) Wolfe Research Auto Daily....
Mining the Filings: Proxy statements underscore AXL management’s focus on strong FCF generation
American Axle seems to be putting their money where their mouth is.... Proxy disclosures suggest Comp is tied to impressive free cash flow.
Interesting read-throughs from Jaguar/Land Rover's results
While one of the smaller global automakers, Jaguar/Land Rover remains an important OEM customer to a number of US Suppliers, including LEA, VC, MGA, and AXL. With that in mind, we have reviewed the company’s CY 1Q19 results (released Monday), with key takeaways for these Suppliers.
AutoZone: Re-rating on Commercial Growth Continues
Improved execution in DIFM and muted online fears have caused a re-rating of AZO’s multiple despite only minor EBITDA estimate revisions. At the current valuation, we don’t see a large margin of error with a few risks overhanging the company. Maintain underperform rating.
Copart: Looking for a clean quarter ahead of the IAA Spin
We have a mixed read on CPRT's Q3 given difficult compares in non-insurance, balanced by IAA's accelerated Q1 exit rate, which could be a positive signal for the insurance business.
We wanted to flag a few highlights in today's Wolfe Research Auto Daily...
- Early Model 3 ASP data looks encouraging. Expect Q1 deliveries of 75k units.
- What if Ford cuts International in half?
- If you live in China, you may be waiting 3 more days to buy your car
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