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Credit Acceptance (CACC) Up 2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Credit Acceptance (CACC - Free Report) . Shares have added about 2% 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 drivers.
Credit Acceptance Q2 Earnings Miss, Revenues Down Y/Y
Credit Acceptance’s second-quarter 2022 earnings of $7.94 per share lagged the Zacks Consensus Estimate of $13.09 by a significant margin. The bottom line reflects a 53.8% plunge from the prior-year quarter. These figures include certain non-recurring items.
Results were adversely impacted by lower revenues and a drastic jump in operating expenses. Higher provisions for credit losses on the worsening macroeconomic environment and recessionary fears also posed an undermining factor.
However, the rise in consumer loan assignment volume acted as a tailwind.
Excluding non-recurring items, net income (non-GAAP basis) was $188.2 million or $13.92 per share compared with $230.3 million or $13.71 per share in the prior-year quarter.
GAAP Revenues Down, Expenses Surge
Total revenues were $457.4 million, down 3% year over year. Lower finance charges mainly led to the decline in revenues. The top line beat the Zacks Consensus Estimate of $443.7 million.
Provision for credit losses was $147.5 million against a provision benefit of $30.5 million in the year-ago quarter.
Operating expenses of $116.7 million jumped 66.2%. This included a $12.0 million charge related to an agreement to settle a previously-disclosed class action lawsuit and a $20.0 million increase in stock-based compensation expenses.
As of Jun 30, 2022, net loans receivable were $6.32 billion, down marginally from the December 2021 level. Total assets were $7 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.52 billion, down 16.7%.
During the quarter, consumer loan assignment volumes in terms of unit and dollar volumes rose 5.1% and 22.0%, respectively, on a year-over-year basis.
Share Repurchase Update
During the quarter, Credit Acceptance repurchased nearly 404,000 shares.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted 12.91% due to these changes.
VGM Scores
At this time, Credit Acceptance has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 B. 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 this revision 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 belongs to the Zacks Financial - Consumer Loans industry. Another stock from the same industry, Discover (DFS - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
Discover reported revenues of $3.22 billion in the last reported quarter, representing a year-over-year change of -9.9%. EPS of $3.96 for the same period compares with $5.55 a year ago.
For the current quarter, Discover is expected to post earnings of $3.73 per share, indicating a change of +5.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Discover. Also, the stock has a VGM Score of C.
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Credit Acceptance (CACC) Up 2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Credit Acceptance (CACC - Free Report) . Shares have added about 2% 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 drivers.
Credit Acceptance Q2 Earnings Miss, Revenues Down Y/Y
Credit Acceptance’s second-quarter 2022 earnings of $7.94 per share lagged the Zacks Consensus Estimate of $13.09 by a significant margin. The bottom line reflects a 53.8% plunge from the prior-year quarter. These figures include certain non-recurring items.
Results were adversely impacted by lower revenues and a drastic jump in operating expenses. Higher provisions for credit losses on the worsening macroeconomic environment and recessionary fears also posed an undermining factor.
However, the rise in consumer loan assignment volume acted as a tailwind.
Excluding non-recurring items, net income (non-GAAP basis) was $188.2 million or $13.92 per share compared with $230.3 million or $13.71 per share in the prior-year quarter.
GAAP Revenues Down, Expenses Surge
Total revenues were $457.4 million, down 3% year over year. Lower finance charges mainly led to the decline in revenues. The top line beat the Zacks Consensus Estimate of $443.7 million.
Provision for credit losses was $147.5 million against a provision benefit of $30.5 million in the year-ago quarter.
Operating expenses of $116.7 million jumped 66.2%. This included a $12.0 million charge related to an agreement to settle a previously-disclosed class action lawsuit and a $20.0 million increase in stock-based compensation expenses.
As of Jun 30, 2022, net loans receivable were $6.32 billion, down marginally from the December 2021 level. Total assets were $7 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.52 billion, down 16.7%.
During the quarter, consumer loan assignment volumes in terms of unit and dollar volumes rose 5.1% and 22.0%, respectively, on a year-over-year basis.
Share Repurchase Update
During the quarter, Credit Acceptance repurchased nearly 404,000 shares.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
The consensus estimate has shifted 12.91% due to these changes.
VGM Scores
At this time, Credit Acceptance has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, 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 B. 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 this revision 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 belongs to the Zacks Financial - Consumer Loans industry. Another stock from the same industry, Discover (DFS - Free Report) , has gained 0.7% over the past month. More than a month has passed since the company reported results for the quarter ended June 2022.
Discover reported revenues of $3.22 billion in the last reported quarter, representing a year-over-year change of -9.9%. EPS of $3.96 for the same period compares with $5.55 a year ago.
For the current quarter, Discover is expected to post earnings of $3.73 per share, indicating a change of +5.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Discover. Also, the stock has a VGM Score of C.