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Why Is Credit Acceptance (CACC) Down 4.8% Since Last Earnings Report?
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It has been about a month since the last earnings report for Credit Acceptance (CACC - Free Report) . Shares have lost about 4.8% 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 catalysts.
Credit Acceptance’s fourth-quarter 2023 earnings of $7.29 per share surpassed the Zacks Consensus Estimate of $4.52 by a significant margin. However, the bottom line reflects a 23.9% fall from the prior-year quarter. These figures include certain non-recurring items.
Results were aided by an improvement in GAAP revenues and consumer loan assignment volumes. However, higher operating expenses and provisions were the undermining factors.
Excluding non-recurring items, net income was $129.1 million or $10.06 per share, down from $156.1 million or $11.74 per share in the prior-year quarter.
For 2023, earnings per share of $21.99 surpassed the Zacks Consensus Estimate of $19.38. The bottom line declined 44.1% from the previous year. Excluding non-recurring items, net income was $535.6 million or $41.17 per share, down from $720.1 million or $52.85 per share in 2022.
GAAP Revenues Improve, Operating Expenses Rise
Total quarterly GAAP revenues were $491.6 million, up 7.1% year over year. An increase in finance charges and premiums earned supported revenue growth. The top line beat the Zacks Consensus Estimate of $478.8 million.
Full-year GAAP revenues were $1.90 billion, up 3.8% year over year. The top line beat the Zacks Consensus Estimate of $1.89 billion.
Provision for credit losses was $163.7 million in the reported quarter, up 25.6% year over year. Our estimate for the metric was $185.9 million.
Operating expenses of $114.3 million increased 10% year over year. We had projected operating expenses of $126.4 million.
As of Dec 31, 2023, net loans receivables were $6.96 billion, up 10.4% from the December 2022 level. Our estimate for the metric was $6.55 billion.
Total assets were $7.61 billion as of the same date, up from $6.90 billion as of Dec 31, 2022. Total shareholders’ equity was $1.75 billion, up 8%.
In the reported quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 26.7% and 21.3%, respectively, on a year-over-year basis.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Credit Acceptance has an average Growth Score of C, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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 - Free Report) , a stock from the same industry, has gained 2.3%. The company reported its results for the quarter ended December 2023 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 +5.2%. EPS of $2.24 for the same period compares with $2.82 a year ago.
For the current quarter, Capital One is expected to post earnings of $3.45 per share, indicating a change of +49.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Capital One. Also, the stock has a VGM Score of B.
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Why Is Credit Acceptance (CACC) Down 4.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Credit Acceptance (CACC - Free Report) . Shares have lost about 4.8% 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 catalysts.
Credit Acceptance Q4 Earnings Beat, Revenue Rise Y/Y
Credit Acceptance’s fourth-quarter 2023 earnings of $7.29 per share surpassed the Zacks Consensus Estimate of $4.52 by a significant margin. However, the bottom line reflects a 23.9% fall from the prior-year quarter. These figures include certain non-recurring items.
Results were aided by an improvement in GAAP revenues and consumer loan assignment volumes. However, higher operating expenses and provisions were the undermining factors.
Excluding non-recurring items, net income was $129.1 million or $10.06 per share, down from $156.1 million or $11.74 per share in the prior-year quarter.
For 2023, earnings per share of $21.99 surpassed the Zacks Consensus Estimate of $19.38. The bottom line declined 44.1% from the previous year. Excluding non-recurring items, net income was $535.6 million or $41.17 per share, down from $720.1 million or $52.85 per share in 2022.
GAAP Revenues Improve, Operating Expenses Rise
Total quarterly GAAP revenues were $491.6 million, up 7.1% year over year. An increase in finance charges and premiums earned supported revenue growth. The top line beat the Zacks Consensus Estimate of $478.8 million.
Full-year GAAP revenues were $1.90 billion, up 3.8% year over year. The top line beat the Zacks Consensus Estimate of $1.89 billion.
Provision for credit losses was $163.7 million in the reported quarter, up 25.6% year over year. Our estimate for the metric was $185.9 million.
Operating expenses of $114.3 million increased 10% year over year. We had projected operating expenses of $126.4 million.
As of Dec 31, 2023, net loans receivables were $6.96 billion, up 10.4% from the December 2022 level. Our estimate for the metric was $6.55 billion.
Total assets were $7.61 billion as of the same date, up from $6.90 billion as of Dec 31, 2022. Total shareholders’ equity was $1.75 billion, up 8%.
In the reported quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 26.7% and 21.3%, respectively, on a year-over-year basis.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Credit Acceptance has an average Growth Score of C, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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 - Free Report) , a stock from the same industry, has gained 2.3%. The company reported its results for the quarter ended December 2023 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 +5.2%. EPS of $2.24 for the same period compares with $2.82 a year ago.
For the current quarter, Capital One is expected to post earnings of $3.45 per share, indicating a change of +49.4% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.2% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Capital One. Also, the stock has a VGM Score of B.