Credit Acceptance (CACC) Up 5.9% on Q3 Earnings, Revenue Beat

Zacks Equity Research
·3-min read

Shares of Credit Acceptance Corporation CACC rallied 5.9% in aftermarket trading in response to its third-quarter 2020 results. Earnings of $13.56 per share comfortably outpaced the Zacks Consensus Estimate of $5.69. Also, this compares favorably with $8.73 earned in the prior-year quarter. The figure includes certain non-recurring items.

Increase in revenues and lower operating expenses supported results. Further, the company recorded provision benefit during the quarter. Moreover, the balance sheet remained strong.

Excluding non-recurring items, net income (non-GAAP basis) was $167 million or $9.36 per share compared with $168.4 million or $8.89 per share in the prior-year quarter.

GAAP Revenues Increase, Expenses Fall

Total revenues were $426.5 million, up 12.6% year over year. The increase was largely driven by a rise in finance charges. Moreover, the figure beat the Zacks Consensus Estimate of $421.4 million.

Provision for credit losses was reversal of $29.3 million compared with provision of $19.3 million in the year-ago quarter.

Operating expenses of $80.4 million declined 1.6%. Lower salaries and wages attributed to the fall.

As of Sep 30, 2020, net loans receivable amounted to $6.9 billion, up 2.7% from December 2019-level. Total assets were $7.4 billion as of the same date, relatively stable. Also, total stockholders’ equity was $2.3 billion, down 2% from December 2019 end.

Our Take

Credit Acceptance is well poised for revenue growth, as the economy gradually recovers and demand for consumer loans improve. However, elevated expenses pose a major headwind.

Credit Acceptance Corporation Price, Consensus and EPS Surprise

Credit Acceptance Corporation Price, Consensus and EPS Surprise
Credit Acceptance Corporation Price, Consensus and EPS Surprise

Credit Acceptance Corporation price-consensus-eps-surprise-chart | Credit Acceptance Corporation Quote

Currently, Credit Acceptance carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Performance of Other Consumer Loan Stocks

Ally Financial’s ALLY third-quarter 2020 adjusted earnings of $1.25 per share handily surpassed the Zacks Consensus Estimate of 72 cents. Moreover, the bottom line improved 23.8% from the year-ago figure.

Sallie Mae SLM reported third-quarter 2020 earnings per share of 47 cents (on core basis) beating the Zacks Consensus Estimate of 14 cents. Also, the bottom line compared favorably with 29 cents reported in the prior-year quarter.

Navient Corporation NAVI reported third-quarter 2020 core earnings per share of 99 cents that surpassed the Zacks Consensus Estimate of 78 cents. Also, the bottom line was above the year-ago quarter figure of 62 cents.

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SLM Corporation (SLM) : Free Stock Analysis Report
 
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