The following ratings changes were generated on Thursday, Dec. 4.

We've downgraded Copart ( CPRT) from buy to hold. Strengths include its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a decline in the stock price during the past year and weak operating cash flow.

Revenue rose by 34% since the same quarter a year ago, exceeding the industry average of 3.9% and boosting earnings per share. Copart's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying very successful management of debt levels. The company also maintains an adequate quick ratio of 1.32, which illustrates the ability to avoid short-term cash problems. Return on equity has improved slightly when compared with the same quarter one year prior, which can be construed as a modest strength in the organization. On the basis of ROE, Copart undperperformed the commercial services and supplies industry but outperformed the S&P 500.

Net operating cash flow has declined marginally to $53.62 million, or 2.13% when compared with the same quarter last year, but Copart is in line with the industry average cash flow growth rate of -7.26%. Shares have plunged by 36.92% on the year, apparently dragged down by the decline we have seen in the S&P 500, but the stock is still more expensive (when compared to its current earnings) than most other companies in its industry.

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