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Credit Acceptance (CACC) Stock Down Despite Q4 Earnings Beat
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Credit Acceptance Corporation (CACC - Free Report) fourth-quarter 2020 earnings of $9.43 per share comfortably outpaced the Zacks Consensus Estimate of $8.36. Also, the bottom line compares favorably with $8.60 earned in the prior-year quarter. The figure includes certain non-recurring items.
Increase in revenues and higher loan balance supported results. However, a slight rise in expenses was a headwind. Also, the company recorded an increase in provision during the quarter. Perhaps due to this, investors turned bearish toward the stock, which declined 2.8% in aftermarket trading.
Excluding non-recurring items, net income (non-GAAP basis) was $189.5 million or $10.75 per share, up from $173.5 million or $9.22 per share in the prior-year quarter.
In 2020, earnings per share of $23.47 per share declined 32.1% year over year but beat the consensus estimate of $22.62. Adjusted net income was $686.3 million or $38.26 per share, up from $658.4 million or $34.70 per share in 2019.
GAAP Revenues Increase, Expenses Rise
Quarterly total revenues were $447.4 million, up 15.9% year over year. The increase was largely driven by a rise in finance charges. Moreover, the figure beat the Zacks Consensus Estimate of $436.1 million.
In 2020, total revenues grew 12.1% to $1.67 billion. Also, the top line surpassed the consensus estimate of $1.66 billion.
Provision for credit losses was $92.6 million, up substantially from $27.2 million in the year-ago quarter.
Operating expenses of $84.5 million rose nearly 1%. Higher general and administrative costs lead to the increase.
As of Dec 31, 2020, net loans receivable amounted to $6.8 billion, up 1.5% from December 2019-level. Total assets were $7.5 billion as of the same date, up from $7.4 billion. Total stockholders’ equity was $2.3 billion, down 2.3% from December 2019 end.
Our Take
Credit Acceptance is well poised for revenue growth, as the economy gradually recovers and demand for consumer loans improves. However, elevated expenses pose a major headwind.
Credit Acceptance Corporation Price, Consensus and EPS Surprise
Ally Financial’s (ALLY - Free Report) fourth-quarter 2020 adjusted earnings of $1.60 per share handily surpassed the Zacks Consensus Estimate of $1.05. Also, the bottom line surged 68.4% from the year-ago figure.
Sallie Mae’s (SLM - Free Report) fourth-quarter 2020 earnings per share of $1.15 (on core basis) handily surpassed the Zacks Consensus Estimate of 33 cents. Also, the bottom line compared favorably with 33 cents reported in the prior-year quarter.
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2020 core earnings per share of 88 cents that surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line was above the year-ago quarter figure of 69 cents.
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.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Credit Acceptance (CACC) Stock Down Despite Q4 Earnings Beat
Credit Acceptance Corporation (CACC - Free Report) fourth-quarter 2020 earnings of $9.43 per share comfortably outpaced the Zacks Consensus Estimate of $8.36. Also, the bottom line compares favorably with $8.60 earned in the prior-year quarter. The figure includes certain non-recurring items.
Increase in revenues and higher loan balance supported results. However, a slight rise in expenses was a headwind. Also, the company recorded an increase in provision during the quarter. Perhaps due to this, investors turned bearish toward the stock, which declined 2.8% in aftermarket trading.
Excluding non-recurring items, net income (non-GAAP basis) was $189.5 million or $10.75 per share, up from $173.5 million or $9.22 per share in the prior-year quarter.
In 2020, earnings per share of $23.47 per share declined 32.1% year over year but beat the consensus estimate of $22.62. Adjusted net income was $686.3 million or $38.26 per share, up from $658.4 million or $34.70 per share in 2019.
GAAP Revenues Increase, Expenses Rise
Quarterly total revenues were $447.4 million, up 15.9% year over year. The increase was largely driven by a rise in finance charges. Moreover, the figure beat the Zacks Consensus Estimate of $436.1 million.
In 2020, total revenues grew 12.1% to $1.67 billion. Also, the top line surpassed the consensus estimate of $1.66 billion.
Provision for credit losses was $92.6 million, up substantially from $27.2 million in the year-ago quarter.
Operating expenses of $84.5 million rose nearly 1%. Higher general and administrative costs lead to the increase.
As of Dec 31, 2020, net loans receivable amounted to $6.8 billion, up 1.5% from December 2019-level. Total assets were $7.5 billion as of the same date, up from $7.4 billion. Total stockholders’ equity was $2.3 billion, down 2.3% from December 2019 end.
Our Take
Credit Acceptance is well poised for revenue growth, as the economy gradually recovers and demand for consumer loans improves. However, elevated expenses pose a major headwind.
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 Stocks
Ally Financial’s (ALLY - Free Report) fourth-quarter 2020 adjusted earnings of $1.60 per share handily surpassed the Zacks Consensus Estimate of $1.05. Also, the bottom line surged 68.4% from the year-ago figure.
Sallie Mae’s (SLM - Free Report) fourth-quarter 2020 earnings per share of $1.15 (on core basis) handily surpassed the Zacks Consensus Estimate of 33 cents. Also, the bottom line compared favorably with 33 cents reported in the prior-year quarter.
Navient Corporation (NAVI - Free Report) reported fourth-quarter 2020 core earnings per share of 88 cents that surpassed the Zacks Consensus Estimate of 81 cents. Also, the bottom line was above the year-ago quarter figure of 69 cents.
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.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>