Credit Acceptance (NASDAQ:CACC) Announces Earnings Results

Key Points

• Credit Acceptance reported adjusted EPS of $10.71 (missed consensus by $0.02) and revenue of $406.0 million versus estimates of $580.8 million, while GAAP net income was $135.8 million; the company financed about 96,000 contracts and collected nearly $1.5 billion in the quarter.
• The firm raised capital with a $450 million ABS at a 5.2% all-in cost and recorded moderated portfolio volatility (forecasted net cash flows fell only $9.1 million), with origination declines easing year-over-year.
• Risks remain: market share in the core subprime used-vehicle segment fell to 4.5% (from 5.2% a year ago) and the company took a $54 million provision for forecast changes amid lower-than-expected prepayments, even as management cut headcount ~6% and scaled AI initiatives.

Credit Acceptance (NASDAQ:CACC - Get Free Report) released its quarterly earnings results on Tuesday. The credit services provider reported $10.71 earnings per share for the quarter, missing analysts' consensus estimates of $10.73 by ($0.02), FiscalAI reports. The firm had revenue of $406.00 million for the quarter, compared to analyst estimates of $580.77 million. Credit Acceptance had a return on equity of 28.86% and a net margin of 18.29%.

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 Performance

NASDAQ:CACC traded up $18.67 during mid-day trading on Tuesday, hitting $525.67. The stock had a trading volume of 205,400 shares, compared to its average volume of 193,988. Credit Acceptance has a twelve month low of $401.90 and a twelve month high of $549.75. 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 stock has a market cap of $5.48 billion, a price-to-earnings ratio of 14.40 and a beta of 1.36. The company's 50 day simple moving average is $476.01 and its 200 day simple moving average is $468.58.

Insider Transactions at Credit Acceptance

In other news, Director Kenneth Booth sold 4,000 shares of Credit Acceptance stock in a transaction that occurred on Monday, April 20th. The stock was sold at an average price of $534.00, for a total transaction of $2,136,000.00. Following the completion of the transaction, the director directly owned 22,832 shares in the company, valued at approximately $12,192,288. The trade was a 14.91% decrease in their position. The sale was disclosed in a legal filing with the SEC, which can be accessed through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, COO Jonathan Lum sold 3,000 shares of the business's stock in a transaction that occurred on Monday, April 20th. The stock was sold at an average price of $535.00, for a total value of $1,605,000.00. Following the transaction, the chief operating officer directly owned 31,609 shares in the company, valued at $16,910,815. The trade was a 8.67% decrease in their ownership of the stock. 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 have sold 29,852 shares of company stock valued at $15,782,643. Company insiders own 6.60% of the company's stock.

Institutional Inflows and Outflows

A number of institutional investors have recently made changes to their positions in CACC. State of Wyoming acquired a new position in shares of Credit Acceptance in the fourth quarter valued at $27,000. Kestra Advisory Services LLC bought a new stake in shares of Credit Acceptance during the 4th quarter worth about $27,000. Vestcor Inc bought a new stake in shares of Credit Acceptance during the 3rd quarter worth about $50,000. Raymond James Financial Inc. acquired a new position in Credit Acceptance in the 2nd quarter valued at about $150,000. Finally, Prudential Financial Inc. acquired a new position in Credit Acceptance in the 2nd quarter valued at about $215,000. 81.71% of the stock is owned by institutional investors and hedge funds.

Wall Street Analysts Forecast Growth

A number of research firms have recently issued reports on CACC. TD Cowen lifted their price objective on shares of Credit Acceptance from $460.00 to $470.00 and gave the company a "hold" rating in a report on Friday, January 30th. Weiss Ratings reiterated a "hold (c)" rating on shares of Credit Acceptance in a report on Monday, April 20th. Stephens lifted their price objective on shares of Credit Acceptance from $450.00 to $540.00 and gave the company an "equal weight" rating in a report on Friday, April 17th. Finally, Zacks Research upgraded shares of Credit Acceptance from a "hold" rating to a "strong-buy" rating in a report on Tuesday, February 3rd. One investment analyst has rated the stock with a Strong Buy rating and three have issued a Hold rating to the stock. Based on data from MarketBeat.com, the company presently has an average rating of "Moderate Buy" and an average price target of $505.00.

About Credit Acceptance

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.

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