Credit Acceptance (CACC) Up 1.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Credit Acceptance (CACC). Shares have added about 1.1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Credit Acceptance due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Credit Acceptance Q4 Earnings Beat, Revenues & Costs Up
Credit Acceptance’s fourth-quarter 2021 earnings of $14.60 per share comfortably surpassed the Zacks Consensus Estimate of $12.72. The bottom line reflects a 54.8% increase from the prior-year quarter. These figures include certain non-recurring items.
Results were primarily aided by an increase in revenues and lower provisions. However, higher expenses hurt results to some extent.
Excluding non-recurring items, net income (non-GAAP basis) was $212.6 million or $14.26 per share, up from $189.5 million or $10.75 per share in the prior-year quarter.
In 2021, earnings per share of $59.52 surpassed the Zacks Consensus Estimate of $57.13. The bottom line represents a significant rise from the previous year. Excluding non-recurring items, net income (non-GAAP basis) was $826.8 million or $51.35 per share, up from $686.3 million or $38.26 per share in 2020.
GAAP Revenues Improve, Expenses Rise
Total quarterly revenues were $463.2 million, up 3.5% year over year. The increase was mainly driven by a rise in finance charges and other income. The top line also beat the Zacks Consensus Estimate of $458.2 million.
For 2021, revenues were $1.86 billion, up 11.2% year over year. The top line surpassed the Zacks Consensus Estimate of $1.85 billion.
In the reported quarter, provision for credit losses was $25.9 million, down from $92.6 million in the year-ago quarter.
Operating expenses of $104.5 million rose 23.7% year over year. An increase in salaries and wages, along with higher sales and marketing costs, led to the rise.
As of Dec 31, 2021, net loans receivables were $6.34 billion, down 6.7% from the December-2020 level. Total assets were $7.05 billion as of the same date, down from $7.49 billion as of Dec 31, 2020. Total shareholders’ equity was $1.82 billion, down 20.8%.
Share Repurchase Update
During the quarter, Credit Acceptance repurchased 0.6 million shares.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month.
The consensus estimate has shifted -10.67% due to these changes.
VGM Scores
Currently, Credit Acceptance has a subpar Growth Score of D, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Credit Acceptance has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Credit Acceptance Corporation (CACC) : Free Stock Analysis Report
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