🗞 5 “Compounders" at Their Lowest Valuations in a Decade

Happy Sunday! 👋 

This week we’re taking a look at 5 “compounders” that are now trading at their lowest valuations in a decade.

Let’s dive in!

5 “Compounders” at Decade-Low Multiples

Every now and again, investors reward great companies with the “compounder” tag.

This informal designation is often earned by businesses that possess wide MOATs and have showcased the ability to reinvest capital at high rates of return over long periods of time.

Unfortunately though, the market tends to get carried away with compounders. When times are good, there seems to be no limit as to how high of a multiple these compounders deserve.

But when the narrative changes, valuations compress fast.

Here are 5 “compounders” now trading at their cheapest valuations in more than a decade:

1. Copart

Copart is the global leader in the salvage vehicle industry.

When an insured driver gets in an accident and totals their car, there’s about a 50% chance that vehicle will end up in one of Copart’s salvage yards.

From there, Copart will list the vehicle on its online auction platform so that more than 750,000 dismantlers, rebuilders, and scrap dealers can bid on it.

For the last several decades, Copart’s physical footprint and massive buyer network powered consistent market share gains, and by extension, earnings growth. In turn, investors rewarded the company with a premium multiple. From 2017-2025, Copart traded at an average EV/EBIT of ~26x. 

However, due to lower overall salvage vehicle volumes and the largest auto insurer (Progressive) shifting share to Copart’s largest competitor, Copart’s revenue has actually declined in recent quarters for the first time since the Great Financial Crisis.

With investors worried over how long this could last, Copart’s valuation has been cut in half in the span of just 12 months.

• EV/EBIT: 12.7x

2. Booking Holdings

Booking Holdings has been at the heart of the “Agent-pocalypse” debate over the last several weeks.

The parent company behind brands like Booking.com, Priceline, KAYAK, and OpenTable, is the largest aggregator of travel and dining accommodations in the world.

At its core, Booking possesses a powerful network effect. Travelers go to Booking because it aggregates the most stays in one place, and hosts list on Booking because it generates consistent customer demand.

However, the recent rise of AI agents has left some investors wondering whether or not that network effect can truly last. Meta’s recent launch of Muse shined an even bigger spotlight on this concern. The thinking being that if instead of browsing booking.com for a place to stay, you assign your personalized agent to go out and find the best options, that agent can avoid the aggregators and book directly from a host’s website.

While there are some notable holes in this line of thinking, the threat has already started to take its toll on Booking. Shares have now dropped 17% since the launch of Muse.

• EV/EBIT: 13.6x

3. Rollins

Rollins is the largest pest control company in North America.

Home to more than 60 different brands and hundreds of smaller tuck-in acquisitions, they provide pest control and termite services to families and businesses all over the country.

With more customers in their CRM than any other pest control operator, Rollins is able to generate greater route density for its field technicians. This means fewer dead hours on the roads, and ultimately greater efficiency and margins for Rollins compared to other independent providers.

As a serial acquirer with significant scale advantages and a massive runway for new acquisitions (there are ~32,000 independent pest control businesses in North America), Rollins has certainly earned the “compounder” tag over the years.

But with a recent unexpected departure of their CFO and concerns over AI hurting their SEO-driven lead generation, investors have started to worry about the growth runway.

Shares of Rollins have dropped 54% over the last 6 months, and they’re now in their largest drawdown in 26 years.

• EV/EBIT: 21.1x

4. Autodesk

Autodesk is the undisputed global leader in 3D design and engineering software. Many of its applications such as AutoCAD and Revit have become essentially a mandatory subscription for architects and civil/structural engineers.

In fact, Autodesk’s products are so indispensable to the daily workflows of the AEC (Architecture, Engineering, and Construction) industry that in 2020, a group of 17 UK-based architecture firms actually wrote a public letter to Autodesk’s CEO Andrew Anagnost asking him to stop raising prices. That’s not the kind of thing customers do when they have alternatives.

Naturally, that level of pricing power earned Autodesk a premium valuation with investors for the better part of the last decade.

However, with the recent rise of AI reducing the barriers to development for new applications, investors seem to be revising their long-term growth expectations for Autodesk. The software giant’s earnings multiple has now been cut in half over the last 12 months.

• EV/EBIT: 21.2x

5. Domino’s Pizza

Domino’s is the largest pizza chain in the world with just over 22,000 total locations.

Thanks to their massive store footprint, vertically integrated supply chain, and best-in-class order orchestration software, Domino’s makes and delivers pizzas at a much lower cost than the average pizza chain.

Instead of simply harvesting that cost advantage and turning it into higher profit margins, Domino’s shares those costs savings with the customer in the form of lower prices. This has driven much higher customer throughput for Domino’s compared to peers.

Unfortunately, over the last couple years, fears that weight-loss drugs will curtail quick service restaurant demand have begun to grow. To make matters worse, many of Domino’s largest input costs like labor, pizza ingredients, and even fuel (for delivery), have skyrocketed in 2026.

To top it off, Domino’s CEO Russell Weiner surprised investors by announcing his retirement in June of this year. This has left the stock trading at its lowest earnings multiple since the 2008 financial crisis.

• EV/EBIT: 14.7x

That’s all for this week. 

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