It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. While a well funded company may sustain losses for years, it will need to generate a profit eventually, or else investors will move on and the company will wither away.

In contrast to all that, many investors prefer to focus on companies like Copart (NASDAQ:CPRT), which has not only revenues, but also profits. Even if this company is fairly valued by the market, investors would agree that generating consistent profits will continue to provide Copart with the means to add long-term value to shareholders.

View our latest analysis for Copart

How Fast Is Copart Growing?

If you believe that markets are even vaguely efficient, then over the long term you'd expect a company's share price to follow its earnings per share (EPS) outcomes. That means EPS growth is considered a real positive by most successful long-term investors. Copart managed to grow EPS by 13% per year, over three years. That's a good rate of growth, if it can be sustained.

Top-line growth is a great indicator that growth is sustainable, and combined with a high earnings before interest and taxation (EBIT) margin, it's a great way for a company to maintain a competitive advantage in the market. EBIT margins for Copart remained fairly unchanged over the last year, however the company should be pleased to report its revenue growth for the period of 9.5% to US$4.2b. That's progress.

In the chart below, you can see how the company has grown earnings and revenue, over time. To see the actual numbers, click on the chart.

Fortunately, we've got access to analyst forecasts of Copart's future profits. You can do your own forecasts without looking, or you can take a peek at what the professionals are predicting.

Are Copart Insiders Aligned With All Shareholders?

We would not expect to see insiders owning a large percentage of a US$50b company like Copart. But we are reassured by the fact they have invested in the company. We note that their impressive stake in the company is worth US$4.3b. This suggests that leadership will be very mindful of shareholders' interests when making decisions!

It's good to see that insiders are invested in the company, but are remuneration levels reasonable? A brief analysis of the CEO compensation suggests they are. For companies with market capitalisations over US$8.0b, like Copart, the median CEO pay is around US$13m.