Why Is Credit Acceptance (CACC) Down 3.5% Since Last Earnings Report?
It has been about a month since the last earnings report for Credit Acceptance (CACC). Shares have lost about 3.5% 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 the most recent earnings report in order to get a better handle on the important drivers.
Credit Acceptance Incurs Loss in Q2, Provisions Up Y/Y
Credit Acceptance reported a second-quarter 2024 loss per share of $3.83, missing the Zacks Consensus Estimate for earnings of $7.20. In the prior-year quarter, the company reported earnings of $1.69 per share.
Further, in the reported quarter, the company recognized a $23.7 million loss related to the sale of one of its two office buildings, which has been included in the above-mentioned earnings figure.
Results were primarily hurt by an increase in operating expenses and higher provisions. Nevertheless, improvements in GAAP revenues and consumer loan assignment volumes were positive.
Excluding the non-recurring items, net income was $126.4 million or $10.29 per share, down from $140 million or $10.69 per share in the prior-year quarter.
GAAP Revenues Improve, Operating Expenses Rise
Total GAAP revenues were $538.2 million, up 12.6% year over year. Increased finance charges and premiums earned supported revenue growth. The top line beat the Zacks Consensus Estimate of $523.7 million.
Provision for credit losses was $320.6 million in the reported quarter, up 28% year over year. Our estimate for the metric was $203.2 million.
Operating expenses of $124.4 million increased 6.3% year over year. We had projected operating expenses of $132 million.
As of Jun 30, 2024, net loans receivables were $7.55 billion, up 8.5% from the December 2023 level. Our estimate for the metric was $7.26 billion.
Total assets were $8.26 billion as of the same date, up from $7.61 billion as of Dec 31, 2023. Total shareholders’ equity was $1.55 billion, down from $1.75 billion as of Dec 31, 2023.
In the reported quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 20.9% and 16.3%, respectively, on a year-over-year basis.
During the second quarter, Credit Acceptance repurchased 0.11 million shares for $60.8 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
Currently, Credit Acceptance has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, 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
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, 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, Capital One (COF), a stock from the same industry, has gained 1%. The company reported its results for the quarter ended June 2024 more than a month ago.
Capital One reported revenues of $9.51 billion in the last reported quarter, representing a year-over-year change of +5.5%. EPS of $3.14 for the same period compares with $3.52 a year ago.
Capital One is expected to post earnings of $3.70 per share for the current quarter, representing a year-over-year change of -16.9%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.2%.
Capital One has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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Credit Acceptance Corporation (CACC) : Free Stock Analysis Report
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