Credit Acceptance (NASDAQ:CACC) Shares Gap Down on Disappointing Earnings

Key Points

• Credit Acceptance Corporation reported quarterly earnings of $8.56 per share, falling short of the consensus estimate of $9.84, resulting in a significant stock price gap down at opening.
• Insider sales included Daniel A. Ulatowski selling 6,356 shares valued at over $3.3 million, indicating a potential lack of confidence from company insiders.
• The firm experienced a 9.5% drop in stock price, with current trading at approximately $443.73 subsequent to the earnings report, despite an 8.5% year-over-year revenue increase.

Credit Acceptance Corporation (NASDAQ:CACC - Get Free Report)'s share price gapped down before the market opened on Friday after the company announced weaker than expected quarterly earnings. The stock had previously closed at $490.28, but opened at $450.00. Credit Acceptance shares last traded at $443.73, with a volume of 45,063 shares traded.

The credit services provider reported $8.56 EPS for the quarter, missing the consensus estimate of $9.84 by ($1.28). The business had revenue of $583.80 million during the quarter, compared to analyst estimates of $583.30 million. Credit Acceptance had a net margin of 18.69% and a return on equity of 27.06%. The business's revenue for the quarter was up 8.5% on a year-over-year basis. During the same period last year, the company earned $10.29 EPS.

Insider Buying and Selling

In related news, insider Andrew K. Rostami sold 375 shares of the stock in a transaction that occurred on Friday, June 20th. The stock was sold at an average price of $505.29, for a total transaction of $189,483.75. Following the sale, the insider owned 25,478 shares of the company's stock, valued at $12,873,778.62. This represents a 1.45% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available through the SEC website. Also, major shareholder Jill Foss Watson sold 20,000 shares of Credit Acceptance stock in a transaction dated Wednesday, July 2nd. The stock was sold at an average price of $539.97, for a total value of $10,799,400.00. Following the completion of the transaction, the insider directly owned 102,107 shares of the company's stock, valued at approximately $55,134,716.79. This trade represents a 16.38% decrease in their ownership of the stock. The disclosure for this sale can be found here. Insiders sold a total of 26,731 shares of company stock valued at $14,307,733 over the last three months. Company insiders own 5.30% of the company's stock.

Institutional Trading of Credit Acceptance

Large investors have recently made changes to their positions in the business. London Co. of Virginia purchased a new stake in shares of Credit Acceptance in the 4th quarter valued at approximately $48,148,000. Crow s Nest Holdings LP purchased a new position in shares of Credit Acceptance in the 4th quarter valued at $35,210,000. Khrom Capital Management LLC acquired a new stake in Credit Acceptance during the 1st quarter valued at $30,639,000. Twin Lions Management LLC acquired a new position in shares of Credit Acceptance in the 4th quarter valued at about $21,093,000. Finally, Millennium Management LLC raised its position in shares of Credit Acceptance by 708.8% during the 4th quarter. Millennium Management LLC now owns 43,426 shares of the credit services provider's stock worth $20,387,000 after buying an additional 38,057 shares in the last quarter. 81.71% of the stock is currently owned by institutional investors.

Credit Acceptance Stock Performance

The firm's 50-day moving average price is $504.45 and its two-hundred day moving average price is $498.10. The firm has a market capitalization of $5.24 billion, a PE ratio of 13.02 and a beta of 1.13. The company has a quick ratio of 22.03, a current ratio of 22.03 and a debt-to-equity ratio of 4.16.

Credit Acceptance Company Profile

Credit Acceptance Corporation engages in the provision of financing programs, and related products and services in the United States. The company advances money to automobile dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps the amount collected from the consumers.