Credit Acceptance (NASDAQ:CACC) Releases Quarterly Earnings Results, Misses Expectations By $0.08 EPS

Key Points

• Credit Acceptance missed quarterly earnings expectations: EPS came in at $12.12, $0.08 below consensus, while revenue of $415.0 million was well below the $588.07 million estimate. Net margin was 19.49% and return on equity was 29.95%.
• The stock rose 2.6% to $587.85 during Tuesday trading, despite the earnings shortfall. Shares remain below their 12-month high of $668.86, with a market capitalization of approximately $6.15 billion.
• Analyst sentiment remains cautious: Credit Acceptance has a consensus “Hold” rating and an average price target of $557.50. Meanwhile, insiders sold $29.2 million of stock over the past 90 days, while institutional investors own 81.71% of shares.

Credit Acceptance (NASDAQ:CACC - Get Free Report) posted its quarterly earnings data on Tuesday. The credit services provider reported $12.12 earnings per share for the quarter, missing the consensus estimate of $12.20 by ($0.08), FiscalAI reports. The business had revenue of $415.00 million during the quarter, compared to the consensus estimate of $588.07 million. Credit Acceptance had a net margin of 19.49% and a return on equity of 29.95%.

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Credit Acceptance Trading Up 2.6%

Shares of NASDAQ:CACC traded up $14.88 during midday trading on Tuesday, hitting $587.85. The company had a trading volume of 118,143 shares, compared to its average volume of 182,593. The company has a current ratio of 13.62, a quick ratio of 13.62 and a debt-to-equity ratio of 4.09. Credit Acceptance has a 12 month low of $401.90 and a 12 month high of $668.86. The stock has a market cap of $6.15 billion, a price-to-earnings ratio of 14.61 and a beta of 1.37. The firm has a fifty day simple moving average of $591.94 and a 200 day simple moving average of $523.95.

Insider Activity

In other Credit Acceptance news, insider Erin J. Kerber sold 8,656 shares of Credit Acceptance stock in a transaction dated Wednesday, June 24th. The stock was sold at an average price of $600.94, for a total transaction of $5,201,736.64. Following the transaction, the insider directly owned 25,711 shares in the company, valued at approximately $15,450,768.34. The trade was a 25.19% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is accessible through this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. Also, COO Jonathan Lum sold 6,000 shares of the stock in a transaction dated Wednesday, June 24th. The stock was sold at an average price of $600.00, for a total value of $3,600,000.00. Following the completion of the sale, the chief operating officer owned 31,609 shares of the company's stock, valued at $18,965,400. This trade represents a 15.95% 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. In the last 90 days, insiders have sold 47,304 shares of company stock valued at $29,186,331. 6.10% of the stock is currently owned by company insiders.

Institutional Trading of Credit Acceptance

A number of large investors have recently bought and sold shares of the business. Janney Montgomery Scott LLC increased its holdings in Credit Acceptance by 4.6% in the 4th quarter. Janney Montgomery Scott LLC now owns 571 shares of the credit services provider's stock valued at $253,000 after buying an additional 25 shares during the period. Cetera Investment Advisers boosted its position in shares of Credit Acceptance by 6.3% during the 4th quarter. Cetera Investment Advisers now owns 508 shares of the credit services provider's stock worth $225,000 after acquiring an additional 30 shares in the last quarter. Russell Investments Group Ltd. boosted its position in shares of Credit Acceptance by 5.3% during the 3rd quarter. Russell Investments Group Ltd. now owns 721 shares of the credit services provider's stock worth $337,000 after acquiring an additional 36 shares in the last quarter. Greenline Partners LLC increased its stake in Credit Acceptance by 0.3% in the third quarter. Greenline Partners LLC now owns 13,450 shares of the credit services provider's stock valued at $6,280,000 after acquiring an additional 36 shares during the last quarter. Finally, Ameriprise Financial Inc. increased its stake in Credit Acceptance by 2.0% in the second quarter. Ameriprise Financial Inc. now owns 1,929 shares of the credit services provider's stock valued at $983,000 after acquiring an additional 38 shares during the last quarter. 81.71% of the stock is owned by institutional investors.

Wall Street Analysts Forecast Growth

A number of brokerages have commented on CACC. Stephens raised their price target on shares of Credit Acceptance from $450.00 to $540.00 and gave the stock an "equal weight" rating in a research note on Friday, April 17th. Weiss Ratings raised Credit Acceptance from a "hold (c+)" rating to a "buy (b-)" rating in a research note on Thursday, July 16th. Zacks Research lowered Credit Acceptance from a "strong-buy" rating to a "hold" rating in a research note on Wednesday, May 13th. Finally, TD Cowen boosted their target price on shares of Credit Acceptance from $500.00 to $575.00 and gave the company a "hold" rating in a research note on Tuesday, July 7th. One equities research analyst has rated the stock with a Buy rating and three have issued a Hold rating to the company's stock. Based on data from MarketBeat.com, Credit Acceptance presently has a consensus rating of "Hold" and a consensus price target of $557.50.

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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