Credit Acceptance (NASDAQ:CACC) Issues Quarterly Earnings Results

Credit Acceptance (NASDAQ:CACC) issued its quarterly earnings results on Tuesday. The credit services provider reported $10.71 earnings per share (EPS) for the quarter, missing the consensus estimate of $10.73 by ($0.02), FiscalAI reports. Credit Acceptance had a return on equity of 29.76% and a net margin of 19.49%.The firm had revenue of $406.00 million for the quarter, compared to the consensus estimate of $580.77 million. During the same period last year, the firm earned $9.35 EPS. The company’s revenue for the quarter was up 1.6% on a year-over-year basis.

Here are the key takeaways from Credit Acceptance’s conference call:

• Credit Acceptance reported GAAP net income of $135.8 million ($12.40 per diluted share) and adjusted net income of $117.3 million ($10.71 per diluted share), financing roughly 96,000 contracts and collecting nearly $1.5 billion in the quarter.
• Portfolio volatility moderated — forecasted net cash flows declined only $9.1 million (0.1%), the smallest quarterly change in three years, while origination declines eased to -4.3% (units) and -4.0% (dollars) year-over-year.
• The firm raised capital with a $450 million ABS at a 5.2% all-in cost and achieved its lowest credit spread since late 2021, signaling continued investor demand despite higher Treasury rates.
• Management launched a company-wide operating system, made leadership hires (Chief Business Officer and Chief Sales Officer), and scaled AI in servicing (AI agent handled ~5x more inbound calls), while also reducing headcount by ~6% to tighten the cost base.
• Market share in the core used-vehicle subprime segment fell to 4.5% (first two months of the quarter vs 5.2% a year ago), and the company recorded a $54 million provision for forecast changes driven in part by lower-than-expected prepayments, underscoring ongoing portfolio and macro risks.

Credit Acceptance Stock Down 3.3%

Credit Acceptance stock traded down $17.82 during trading hours on Thursday, hitting $522.11. 9,581 shares of the stock traded hands, compared to its average volume of 193,055. The firm’s 50-day moving average price is $477.61 and its two-hundred day moving average price is $469.27. The company has a current ratio of 16.91, a quick ratio of 16.91 and a debt-to-equity ratio of 4.10. The company has a market cap of $5.44 billion, a PE ratio of 13.07 and a beta of 1.36. Credit Acceptance has a one year low of $401.90 and a one year high of $565.14.

Insider Transactions at Credit Acceptance

In other news, Director Kenneth Booth sold 4,000 shares of the business’s stock in a transaction that occurred on Monday, April 20th. The stock was sold at an average price of $534.00, for a total value of $2,136,000.00. Following the sale, the director directly owned 22,832 shares of the company’s stock, valued at $12,192,288. The trade was a 14.91% decrease in their position. The sale was disclosed in a document filed with the SEC, which is available through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, COO Jonathan Lum sold 3,000 shares of the stock in a transaction dated Monday, April 20th. The shares were sold at an average price of $535.00, for a total transaction of $1,605,000.00. Following the sale, the chief operating officer directly owned 31,609 shares in the company, valued at $16,910,815. This trade represents a 8.67% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last 90 days, insiders sold 29,852 shares of company stock worth $15,782,643. Company insiders own 6.60% of the company’s stock.

Institutional Trading of Credit Acceptance

Several institutional investors have recently added to or reduced their stakes in CACC. Royal Bank of Canada boosted its stake in Credit Acceptance by 31.6% during the 1st quarter. Royal Bank of Canada now owns 1,916 shares of the credit services provider’s stock valued at $989,000 after purchasing an additional 460 shares during the last quarter. AQR Capital Management LLC boosted its stake in Credit Acceptance by 230.6% during the 1st quarter. AQR Capital Management LLC now owns 7,885 shares of the credit services provider’s stock valued at $3,961,000 after purchasing an additional 5,500 shares during the last quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC boosted its stake in Credit Acceptance by 3.9% during the 1st quarter. UBS AM A Distinct Business Unit of UBS Asset Management Americas LLC now owns 23,886 shares of the credit services provider’s stock valued at $12,334,000 after purchasing an additional 900 shares during the last quarter. Creative Planning boosted its stake in Credit Acceptance by 35.6% during the 2nd quarter. Creative Planning now owns 529 shares of the credit services provider’s stock valued at $269,000 after purchasing an additional 139 shares during the last quarter. Finally, JPMorgan Chase & Co. boosted its stake in Credit Acceptance by 4.8% during the 2nd quarter. JPMorgan Chase & Co. now owns 5,077 shares of the credit services provider’s stock valued at $2,586,000 after purchasing an additional 232 shares during the last quarter. 81.71% of the stock is currently owned by hedge funds and other institutional investors.

Analyst Ratings Changes

CACC has been the subject of several research analyst reports. Stephens lifted their price target on Credit Acceptance from $450.00 to $540.00 and gave the stock an “equal weight” rating in a research note on Friday, April 17th. Zacks Research raised Credit Acceptance from a “hold” rating to a “strong-buy” rating in a research note on Tuesday, February 3rd. TD Cowen lifted their price target on Credit Acceptance from $450.00 to $500.00 and gave the stock a “hold” rating in a research note on Wednesday. Finally, Weiss Ratings reaffirmed a “hold (c)” rating on shares of Credit Acceptance in a research note on Monday, April 20th. One analyst has rated the stock with a Strong Buy rating and three have given a Hold rating to the company’s stock. Based on data from MarketBeat.com, the stock has an average rating of “Moderate Buy” and a consensus target price of $520.00.

Credit Acceptance Company Profile

Credit Acceptance Corporation, founded in 1972 and headquartered in Southfield, Michigan, is a specialty finance company focused on the indirect automotive lending market. The company partners with independent and franchised auto dealers to facilitate purchase financing for consumers who may not qualify for traditional prime auto loans. By purchasing retail installment contracts originated by these dealers, Credit Acceptance provides capital and credit insurance to support vehicle sales, enabling dealers to broaden their customer base and reduce credit risk.

Through its proprietary underwriting platform and risk management strategies, Credit Acceptance evaluates borrower applications, structures credit plans, and retains servicing rights on the acquired contracts.