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Credit Acceptance (CACC) Posts Q2 Loss, Y/Y Rise in Provisions
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Credit Acceptance Corporation (CACC - Free Report) 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 per share of $1.69.
Notably, 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 positives.
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.
Our Take
Mounting expenses are expected to hurt Credit Acceptance’s bottom-line growth to an extent in the near term. Moreover, poor asset quality might hamper financials. Nevertheless, the company has been well-poised for revenue growth, given the gradual increase in demand for consumer loans.
Credit Acceptance Corporation Price, Consensus and EPS Surprise
Ally Financial’s (ALLY - Free Report) second-quarter 2024 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Also, the bottom line reflects a rise of 1% from the year-ago quarter.
In the reported quarter, ALLY saw a marginal increase in loans. Also, the capital ratios increased, which was a positive. However, a decline in revenues and higher expenses were the undermining factors. Also, an increase in provisions hurt the results to some extent.
Navient Corporation (NAVI - Free Report) reported second-quarter 2024 adjusted earnings per share (excluding restructuring and regulatory-related expenses and Federal Family Education Loan Program and write-off related to loan premium) of 53 cents, surpassing the Zacks Consensus Estimate of 42 cents. The company reported 52 cents in the prior-year quarter.
NAVI’s results were driven by a decline in total expenses. A solid liquidity position was another positive. However, a decrease in net interest income and other income were headwinds.
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Credit Acceptance (CACC) Posts Q2 Loss, Y/Y Rise in Provisions
Credit Acceptance Corporation (CACC - Free Report) 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 per share of $1.69.
Notably, 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 positives.
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.
Our Take
Mounting expenses are expected to hurt Credit Acceptance’s bottom-line growth to an extent in the near term. Moreover, poor asset quality might hamper financials. Nevertheless, the company has been well-poised for revenue growth, given the gradual increase in demand for consumer loans.
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 Providers
Ally Financial’s (ALLY - Free Report) second-quarter 2024 adjusted earnings of 97 cents per share surpassed the Zacks Consensus Estimate of 62 cents. Also, the bottom line reflects a rise of 1% from the year-ago quarter.
In the reported quarter, ALLY saw a marginal increase in loans. Also, the capital ratios increased, which was a positive. However, a decline in revenues and higher expenses were the undermining factors. Also, an increase in provisions hurt the results to some extent.
Navient Corporation (NAVI - Free Report) reported second-quarter 2024 adjusted earnings per share (excluding restructuring and regulatory-related expenses and Federal Family Education Loan Program and write-off related to loan premium) of 53 cents, surpassing the Zacks Consensus Estimate of 42 cents. The company reported 52 cents in the prior-year quarter.
NAVI’s results were driven by a decline in total expenses. A solid liquidity position was another positive. However, a decrease in net interest income and other income were headwinds.