Credit Acceptance (NASDAQ:CACC) Posts Earnings Results, Misses Expectations By $0.02 EPS

Credit Acceptance (NASDAQ:CACC) posted its earnings results on Tuesday. The credit services provider reported $10.71 EPS for the quarter, missing the consensus estimate of $10.73 by ($0.02), FiscalAI reports. The firm had revenue of $406.00 million during the quarter, compared to analyst estimates of $580.77 million. Credit Acceptance had a net margin of 18.29% and a return on equity of 28.86%.

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 Price Performance

Shares of Credit Acceptance stock traded up $18.67 on Tuesday, reaching $525.67. 205,400 shares of the stock were exchanged, compared to its average volume of 193,988. Credit Acceptance has a one year low of $401.90 and a one year high of $549.75. The firm has a market cap of $5.48 billion, a PE ratio of 14.40 and a beta of 1.36. The company has a debt-to-equity ratio of 4.10, a quick ratio of 16.91 and a current ratio of 16.91. The firm’s 50 day moving average is $476.01 and its 200-day moving average is $468.58.

Wall Street Analyst Weigh In

Several analysts recently weighed in on the company. Stephens lifted their price target on Credit Acceptance from $450.00 to $540.00 and gave the stock an “equal weight” rating in a report on Friday, April 17th. TD Cowen increased their price objective on Credit Acceptance from $460.00 to $470.00 and gave the stock a “hold” rating in a research report on Friday, January 30th. Zacks Research upgraded Credit Acceptance from a “hold” rating to a “strong-buy” rating in a research report on Tuesday, February 3rd. Finally, Weiss Ratings reiterated a “hold (c)” rating on shares of Credit Acceptance in a research report on Monday, April 20th. One research 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, Credit Acceptance has a consensus rating of “Moderate Buy” and a consensus target price of $505.00.

Insider Activity

In other Credit Acceptance news, Director Kenneth Booth sold 4,000 shares of the firm’s stock in a transaction 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 owned 22,832 shares of the company’s stock, valued at approximately $12,192,288. This trade represents a 14.91% decrease in their position. The sale was disclosed in a document filed with the SEC, which can be accessed 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 Credit Acceptance stock in a transaction on Monday, April 20th. The shares were sold at an average price of $535.00, for a total value of $1,605,000.00. Following the completion of the transaction, the chief operating officer owned 31,609 shares in the company, valued at approximately $16,910,815. The trade was a 8.67% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Over the last ninety days, insiders sold 29,852 shares of company stock valued at $15,782,643. Corporate insiders own 6.60% of the company’s stock.

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently bought and sold shares of the business. Boston Partners raised its stake in Credit Acceptance by 3.4% during the fourth quarter. Boston Partners now owns 456,253 shares of the credit services provider’s stock worth $202,373,000 after acquiring an additional 14,877 shares in the last quarter. Dimensional Fund Advisors LP boosted its stake in shares of Credit Acceptance by 9.8% in the 4th quarter. Dimensional Fund Advisors LP now owns 223,872 shares of the credit services provider’s stock valued at $99,284,000 after purchasing an additional 20,011 shares in the last quarter. Smead Capital Management Inc. grew its holdings in shares of Credit Acceptance by 17.0% during the 2nd quarter. Smead Capital Management Inc. now owns 216,811 shares of the credit services provider’s stock valued at $110,450,000 after purchasing an additional 31,438 shares during the last quarter. Smith Thomas W bought a new stake in shares of Credit Acceptance during the 4th quarter valued at approximately $42,083,000. Finally, Twin Lions Management LLC grew its holdings in shares of Credit Acceptance by 12.2% during the 4th quarter. Twin Lions Management LLC now owns 83,958 shares of the credit services provider’s stock valued at $37,232,000 after purchasing an additional 9,116 shares during the last quarter. Institutional investors own 81.71% of the company’s stock.

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.