Shares of Credit Acceptance Corporation (CACC - Free Report) rallied 5% in aftermarket trading in response to better-than-expected first-quarter 2022 results. Earnings of $14.94 per share comfortably surpassed the Zacks Consensus Estimate of $13.13. The bottom line reflects a 26.4% increase from the prior-year quarter. These figures include certain non-recurring items.
Results were primarily aided by an increase in revenues and lower expenses. However, higher provisions hurt results to some extent.
Excluding non-recurring items, net income (non-GAAP basis) was $197.6 million or $13.76 per share, up from $164.8 million or $9.64 per share in the prior-year quarter.
GAAP Revenues Improve, Expenses Down
Total revenues were $455.7 million, up 1% year over year. The increase was mainly driven by a rise in other income. The top line also beat the Zacks Consensus Estimate of $443.6 million.
In the reported quarter, provision for credit losses was $23.3 million, up 9.4% from the year-ago quarter.
Operating expenses of $102.5 million declined 9%. Lower general and administrative expenses more than offset an increase in salaries and wages and sales and marketing costs.
As of Mar 31, 2022, net loans receivable were $6.33 billion, down marginally from the December-2021 level. Total assets were $7.04 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.63 billion, down 11.7%.
Share Repurchase Update
During the quarter, Credit Acceptance repurchased 0.8 million shares.
Our Take
Credit Acceptance remains well-poised for revenue growth, given the gradual increase in demand for consumer loans. However, elevated expenses pose a major headwind.
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) first-quarter 2022 adjusted earnings of $2.03 per share surpassed the Zacks Consensus Estimate of $1.93. The bottom line reflects a decline of 2.9% from the year-ago quarter.
Results benefited primarily from an improvement in revenues and higher loans and deposit balances. However, a rise in expenses and higher provisions hurt ALLY’s results to some extent.
Capital One’s (COF - Free Report) first-quarter 2022 earnings of $5.62 per share easily outpaced the Zacks Consensus Estimate of $5.39. The bottom line, however, declined 20% from the year-ago quarter. The reported quarter included 35 cents per share of gain on the sale of the partnership card portfolio.
Results benefited from a decent improvement in loan balances, which supported net interest income. Higher consumer confidence aided credit card business and non-interest income. However, an increase in operating expenses was a headwind. During the quarter, the company recorded a provision for credit losses.
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Shares of Credit Acceptance Corporation (CACC - Free Report) rallied 5% in aftermarket trading in response to better-than-expected first-quarter 2022 results. Earnings of $14.94 per share comfortably surpassed the Zacks Consensus Estimate of $13.13. The bottom line reflects a 26.4% increase from the prior-year quarter. These figures include certain non-recurring items.
Results were primarily aided by an increase in revenues and lower expenses. However, higher provisions hurt results to some extent.
Excluding non-recurring items, net income (non-GAAP basis) was $197.6 million or $13.76 per share, up from $164.8 million or $9.64 per share in the prior-year quarter.
GAAP Revenues Improve, Expenses Down
Total revenues were $455.7 million, up 1% year over year. The increase was mainly driven by a rise in other income. The top line also beat the Zacks Consensus Estimate of $443.6 million.
In the reported quarter, provision for credit losses was $23.3 million, up 9.4% from the year-ago quarter.
Operating expenses of $102.5 million declined 9%. Lower general and administrative expenses more than offset an increase in salaries and wages and sales and marketing costs.
As of Mar 31, 2022, net loans receivable were $6.33 billion, down marginally from the December-2021 level. Total assets were $7.04 billion as of the same date, down from $7.05 billion as of Dec 31, 2021. Total stockholders’ equity was $1.63 billion, down 11.7%.
Share Repurchase Update
During the quarter, Credit Acceptance repurchased 0.8 million shares.
Our Take
Credit Acceptance remains well-poised for revenue growth, given the gradual increase in demand for consumer loans. However, elevated expenses pose a major headwind.
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) first-quarter 2022 adjusted earnings of $2.03 per share surpassed the Zacks Consensus Estimate of $1.93. The bottom line reflects a decline of 2.9% from the year-ago quarter.
Results benefited primarily from an improvement in revenues and higher loans and deposit balances. However, a rise in expenses and higher provisions hurt ALLY’s results to some extent.
Capital One’s (COF - Free Report) first-quarter 2022 earnings of $5.62 per share easily outpaced the Zacks Consensus Estimate of $5.39. The bottom line, however, declined 20% from the year-ago quarter. The reported quarter included 35 cents per share of gain on the sale of the partnership card portfolio.
Results benefited from a decent improvement in loan balances, which supported net interest income. Higher consumer confidence aided credit card business and non-interest income. However, an increase in operating expenses was a headwind. During the quarter, the company recorded a provision for credit losses.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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