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Credit Acceptance (CACC) Down 4.3% Since Last Earnings Report: Can It Rebound?

·3 min read

A month has gone by since the last earnings report for Credit Acceptance (CACC). Shares have lost about 4.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Credit Acceptance due for a breakout? 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 Q1 Earnings Beat, Revenues Rise Y/Y

Credit Acceptance’s first-quarter 2022 earnings of $14.94 per share comfortably surpassed the Zacks Consensus Estimate of $13.13. The bottom line reflects a 26.4% increase from the prior-year quarter. These figures include certain non-recurring items.

Results were primarily aided by an increase in revenues and lower expenses. However, higher provisions hurt results to some extent.

Excluding non-recurring items, net income (non-GAAP basis) was $197.6 million or $13.76 per share, up from $164.8 million or $9.64 per share in the prior-year quarter.

GAAP Revenues Improve, Expenses Down

Total revenues were $455.7 million, up 1% year over year. The increase was mainly driven by a rise in other income. The top line also beat the Zacks Consensus Estimate of $443.6 million.

In the reported quarter, provision for credit losses was $23.3 million, up 9.4% from the year-ago quarter.

Operating expenses of $102.5 million declined 9%. Lower general and administrative expenses more than offset an increase in salaries and wages and sales and marketing costs.

As of Mar 31, 2022, net loans receivable were $6.33 billion, down marginally from the December-2021 level. Total assets were $7.04 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.63 billion, down 11.7%.

Share Repurchase Update

During the quarter, Credit Acceptance repurchased 0.8 million shares.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

Currently, Credit Acceptance has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Credit Acceptance is part of the Zacks Financial - Consumer Loans industry. Over the past month, Sallie Mae (SLM), a stock from the same industry, has gained 13.4%. The company reported its results for the quarter ended March 2022 more than a month ago.

Sallie Mae reported revenues of $375.03 million in the last reported quarter, representing a year-over-year change of +13.3%. EPS of $0.46 for the same period compares with $1.77 a year ago.

For the current quarter, Sallie Mae is expected to post earnings of $1.02 per share, indicating a change of +126.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

Sallie Mae has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.


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