It has been about a month since the last earnings report for Credit Acceptance (CACC Quick QuoteCACC - Free Report) . Shares have added about 8.4% in that time frame, underperforming 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 the most recent earnings report in order to get a better handle on the important drivers.

Credit Acceptance Q3 Earnings Miss Estimates, Costs Rise

Credit Acceptance’s third-quarter 2022 earnings of $6.49 per share lagged the Zacks Consensus Estimate of $11.37 by a significant margin. The bottom line reflects a 58.9% fall from the prior-year quarter. These figures include certain non-recurring items.

Results were adversely impacted by lower revenues and higher operating expenses. Also, higher provisions for credit losses 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 $178.5 million or $13.36 per share compared with $219.1 million or $13.84 per share in the prior-year quarter.

GAAP Revenues Decline, Operating Expenses Rise

Total GAAP revenues were $460.3 million, down 2.1% year over year. Lower finance charges mainly led to the revenue decline. The top line beat the Zacks Consensus Estimate of $453.3 million.

Provision for credit losses was $180.3 million against a provision benefit of $8.3 million in the year-ago quarter.

Operating expenses of $103.2 million increased 7.1% year over year.

As of Sep 30, 2022, net loans receivable were $6.31 billion, down marginally from the December 2021 level. Total assets were $6.89 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.59 billion, down 12.9%.

In the quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 29.3% and 32.1%, respectively, on a year-over-year basis.

Share Repurchase Update

In the quarter, Credit Acceptance repurchased 54,000 shares.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended downward during the past month.

The consensus estimate has shifted -28.91% due to these changes.

VGM Scores

Currently, Credit Acceptance has a nice Growth Score of B, a grade with the same score on the momentum front. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. 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 these revisions indicates a downward shift. It's no surprise Credit Acceptance has a Zacks Rank #5 (Strong Sell). We expect a below average 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, Sallie Mae (SLM Quick QuoteSLM - Free Report) , has gained 7.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2022.

Sallie Mae reported revenues of $369.51 million in the last reported quarter, representing a year-over-year change of +3.4%. EPS of $0.29 for the same period compares with $0.24 a year ago.

For the current quarter, Sallie Mae is expected to post earnings of $0.48 per share, indicating a change of -54.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +2.1% over the last 30 days.

Sallie Mae has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.