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Credit Acceptance (CACC) Gains as Q4 Earnings Beat Estimates
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Shares of Credit Acceptance Corporation (CACC - Free Report) gained 3.3% in after-market trading following the release of its fourth-quarter and 2022 results. Quarterly earnings of $9.58 per share surpassed the Zacks Consensus Estimate of $7.71. The bottom line reflects a 34.4% fall from the prior-year quarter. These figures include certain non-recurring items. Our estimate for earnings was $6.35.
Results were aided by a marginal decline in operating expenses. Also, the rise in consumer loan assignment volumes acted as a tailwind. However, lower GAAP revenues and significantly higher provisions were the undermining factors.
Excluding non-recurring items, net income (non-GAAP basis) was $156.1 million or $11.74 per share compared with $212.6 million or $14.26 per share in the prior-year quarter. Our estimate for adjusted net income was $116.2 million.
GAAP earnings of $39.32 per share for 2022 beat the Zacks Consensus Estimate of $36.61. The bottom line reflects a 33.9% decline from 2021. Our estimate for earnings was $35.72.
GAAP Revenues & Operating Expenses Decline
Total quarterly GAAP revenues were $459 million, down 1% year over year. Lower finance charges mainly led to the revenue decline. The top line beat the Zacks Consensus Estimate of $436.4 million. Our estimate for revenues was $430.1 million.
Total GAAP revenues for 2022 were $1.83 billion, down 1.3% year over year. The top line beat the Zacks Consensus Estimate of $1.81 billion. Our estimate for revenues was $1.80 billion.
Provision for credit losses was $130.3 million, up significantly from $25.9 million in the year-ago quarter. Our estimate for the metric was $102.9 million.
Operating expenses of $103.9 million decreased marginally year over year.
As of Dec 31, 2022, net loans receivable were $6.30 billion, down marginally from the December 2021 level. Total assets were $6.90 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.62 billion, down 11%.
In the quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 25.6% and 26.2%, respectively, on a year-over-year basis.
Share Repurchase Update
In the reported quarter, Credit Acceptance repurchased 208,000 shares.
Our Take
While finance charges are likely to witness headwinds from macroeconomic factors in the near term, the same will rebound once the operating backdrop improves, thus aiding CACC’s top-line growth. Worsening credit quality will likely negatively impact financials in the near term.
Ally Financial’s (ALLY - Free Report) fourth-quarter adjusted earnings of $1.12 per share lagged the Zacks Consensus Estimate of $1.73. The bottom line declined 48.1% from the year-ago quarter. Our estimate for earnings was $1.75.
ALLY’s results were primarily hurt by a rise in expenses, a decline in other revenues and higher provisions. However, an improvement in net financing revenues was an offsetting factor. Loan balances witnessed a rise, which was a positive for ALLY.
Capital One’s (COF - Free Report) fourth-quarter 2022 adjusted earnings of $2.82 per share lagged the Zacks Consensus Estimate of $3.81. The bottom line plunged 47.9% from the year-ago quarter. Our estimate for earnings was $3.66.
COF’s results were adversely impacted by significantly higher provisions. Also, an increase in operating expenses acted as a headwind. Yet, a robust improvement in loan balances and higher interest rates aided net interest income. A rise in non-interest income was another positive for COF.
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Credit Acceptance (CACC) Gains as Q4 Earnings Beat Estimates
Shares of Credit Acceptance Corporation (CACC - Free Report) gained 3.3% in after-market trading following the release of its fourth-quarter and 2022 results. Quarterly earnings of $9.58 per share surpassed the Zacks Consensus Estimate of $7.71. The bottom line reflects a 34.4% fall from the prior-year quarter. These figures include certain non-recurring items. Our estimate for earnings was $6.35.
Results were aided by a marginal decline in operating expenses. Also, the rise in consumer loan assignment volumes acted as a tailwind. However, lower GAAP revenues and significantly higher provisions were the undermining factors.
Excluding non-recurring items, net income (non-GAAP basis) was $156.1 million or $11.74 per share compared with $212.6 million or $14.26 per share in the prior-year quarter. Our estimate for adjusted net income was $116.2 million.
GAAP earnings of $39.32 per share for 2022 beat the Zacks Consensus Estimate of $36.61. The bottom line reflects a 33.9% decline from 2021. Our estimate for earnings was $35.72.
GAAP Revenues & Operating Expenses Decline
Total quarterly GAAP revenues were $459 million, down 1% year over year. Lower finance charges mainly led to the revenue decline. The top line beat the Zacks Consensus Estimate of $436.4 million. Our estimate for revenues was $430.1 million.
Total GAAP revenues for 2022 were $1.83 billion, down 1.3% year over year. The top line beat the Zacks Consensus Estimate of $1.81 billion. Our estimate for revenues was $1.80 billion.
Provision for credit losses was $130.3 million, up significantly from $25.9 million in the year-ago quarter. Our estimate for the metric was $102.9 million.
Operating expenses of $103.9 million decreased marginally year over year.
As of Dec 31, 2022, net loans receivable were $6.30 billion, down marginally from the December 2021 level. Total assets were $6.90 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.62 billion, down 11%.
In the quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 25.6% and 26.2%, respectively, on a year-over-year basis.
Share Repurchase Update
In the reported quarter, Credit Acceptance repurchased 208,000 shares.
Our Take
While finance charges are likely to witness headwinds from macroeconomic factors in the near term, the same will rebound once the operating backdrop improves, thus aiding CACC’s top-line growth. Worsening credit quality will likely negatively impact financials in the near term.
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 Providers
Ally Financial’s (ALLY - Free Report) fourth-quarter adjusted earnings of $1.12 per share lagged the Zacks Consensus Estimate of $1.73. The bottom line declined 48.1% from the year-ago quarter. Our estimate for earnings was $1.75.
ALLY’s results were primarily hurt by a rise in expenses, a decline in other revenues and higher provisions. However, an improvement in net financing revenues was an offsetting factor. Loan balances witnessed a rise, which was a positive for ALLY.
Capital One’s (COF - Free Report) fourth-quarter 2022 adjusted earnings of $2.82 per share lagged the Zacks Consensus Estimate of $3.81. The bottom line plunged 47.9% from the year-ago quarter. Our estimate for earnings was $3.66.
COF’s results were adversely impacted by significantly higher provisions. Also, an increase in operating expenses acted as a headwind. Yet, a robust improvement in loan balances and higher interest rates aided net interest income. A rise in non-interest income was another positive for COF.