How does a company that moves millions of mangled cars through muddy lots post a 37.1% operating margin - surpassing Google and Apple?

The answer may surprise you - it’s real estate.

Copart owns 90% of the land it operates on. Its competitor IAA leased theirs to keep ROIC high and the balance sheet light. Copart took the opposite approach and bought everything.

The result? A massive expense line (rent) simply doesn’t exist on Copart’s income statement. The 750 basis point spread between Copart and IAA isn’t a quality-of-earnings concern. It’s a quantification of a multi-decade moat.

We broke down the full GAAP distortion and what it means for investors 📑