A 16-year growth streak just broke at the same moment the multiple cut in half — the next two prints decide which one was right.

• The cadence. Revenue went from +10–14% quarterly through early FY25 to −3.6% in Q2 FY26 — the first decline since the pandemic — then a soft +2.1% in Q3. Nine-month FY26 revenue: −0.2%. US service revenue was −5.6% in Q2 and improved to −0.4% in Q3, but management has not explained the weakness in any 10-Q.
• The multiple. P/E compressed from a 10-year average of 30.5× to 20.2×; EV/EBITDA from 21.3× to 13.9×. The Street has quietly shifted the comp from historical CPRT toward LKQ at 12.9× — pricing the slowdown as terminal rather than cyclical.
• The variable that decides it. Two consecutive quarters of US service revenue. Above flat is consistent with cyclical (FY25 hurricane base lapse + FX + used-car normalization); below −2% is consistent with structural (IAA share rebalancing, demand reset). The Q4 FY26 print lands early September 2026.

A salvage duopoly where one side runs 36.5% operating margins and the other runs 15.5% — a decade after RB Global paid $7.3B to close the gap.

The moat is the asphalt and the title queue, not the auction software — ~250 permitted yards holding $3.7B of land near US population centers, direct computer links into state DMVs for salvage-title issuance, and a million-buyer network that pulled 38.8% of US units off to international IP addresses in FY25. RB Global paid $7.3B for IAA in 2023 explicitly to scale against Copart; three years on, the 21-point margin gap hasn't narrowed by a single point. The next RBA segment disclosure is the leading test of whether that holds.

$1.6B retired in nine months — Copart's first material buyback in 40 years — yet consensus FY27 EPS still implies share count falling 2%, not 6%.

• First in 40 years. $1.633B repurchased across 9M FY26 — share count down 3.6% YoY by Q3, with $4.2B of net cash still on hand after the spend. From FY2018 through FY2025, Copart's net buyback was essentially zero; the cash sat in T-bills while the multiple peaked at 37×.
• The denominator. At the 9-month pace (~$2.1B annualized) against 977M shares, count compounds down 6–7% a year. Even at flat operating income, EPS grows ~6% from retirement alone; ~$300M of T-bill interest income on remaining cash adds another point. Street FY27 EPS of $1.70 (3.4% off FY25) clearly under-models this — the implied math at $1.85 and 22× lands at ~$41, equal to the Street target without any operational reacceleration.
• The catch. No multi-year framework disclosed, no target capital structure, no commentary linking the pivot to the slowing topline. Directors sold $50M+ over 18 months with zero open-market buying, and in September 2025 the board waived its anti-pledging policy to let founder Willis Johnson collateralize up to 20% of his ~56M-share stake. Bears read it as reactive, not regime change.

A DOJ anti-money-laundering investigation has sat in identical 10-K language for two years — and it touches the exact lever the bull case depends on.

• What's disclosed. The DOJ Consumer Protection Branch is investigating Copart's AML controls on auction-platform member onboarding. The language is identical across the FY24 and FY25 10-Ks — no charging document, no scope, no timing, no accrual. A third year of identical disclosure would be a non-event; any material change — consent decree, market exclusions, onboarding restrictions — would touch the international buyer pool that consumed 38.8% of US units in FY25 and drove +18.9% International service-revenue growth.
• Why it lands here. The buyer-onboarding pipeline is the engine of revenue-per-car expansion — the single largest lever in the long-term thesis after total-loss frequency. A KYC-only resolution leaves the moat intact; a consent decree restricting onboarding constrains the variable the variant view rests on. There is no public timeline and no consensus expectation.
• The governance fingerprint. Founder + son-in-law own 8.9% with no diversification mechanism — owner-aligned by any standard — but the September 2025 pledging waiver is uncomfortable behavior at a multi-year low, and the lead independent director is a former Copart officer of 21 years' standing. The board's April 2026 equity grant to CEO Liaw, his first in four years, is the next real test of independence from the founder family.