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4 Reasons to Invest in Credit Acceptance (CACC) Stock Now
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It seems to be a wise idea to add Credit Acceptance Corporation (CACC - Free Report) stock to your portfolio now. Strong fundamentals and good growth prospects make this stock a promising pick right now.
The Zacks Consensus Estimate for the company’s current-year and next-year earnings has been unchanged over the past seven days. It currently sports a Zacks Rank #1 (Strong Buy).
Looking at its price performance, shares of the company have gained 12% over the past six months compared with 59% growth recorded by the industry. Given the strength in its fundamentals and a top Zacks Rank, the price performance is expected to improve in the future.
Here are a few aspects that make Credit Acceptance an attractive investment option now.
Revenue Strength: Driven mainly by the continued rise in finance charges, the company’s revenues witnessed a five-year (2016-2020) compound annual growth rate of 14.6%.
Moreover, given a decent rise in dealer enrollments and active dealers, its top line is expected to improve. Credit Acceptance’s revenues are projected to grow 7.7% in 2021.
Earnings per Share (EPS) Growth: The company recorded EPS growth of 23.6% over the past three-five years (higher than the industry average of 12.1%). The upward trend in earnings is expected to continue in the near term. In 2021, earnings are projected to improve 15.2%, higher than the industry’s average growth of 14.3%.
Superior Return on Equity (ROE): Credit Acceptance’s ROE is 31.76%, significantly higher than the industry average of 17.47%. This indicates that the company reinvests its cash more efficiently compared with peers.
Steady Capital Deployments: Credit Acceptance believes in returning capital to shareholders through stock repurchases instead of paying dividends. In March 2020, it authorized an additional 3 million shares to be repurchased (in addition to the previous authorizations). As of Dec 31, 2020, the company had almost 2.5 million shares left to be repurchased. Despite having a substantial debt burden, its high cash flow generating business model and low capital expenditure are likely to help sustain share buybacks, going forward.
Other Key Picks
Hope Bancorp, Inc. (HOPE - Free Report) has witnessed an upward earnings estimate revision of 22% for 2021 over the past 60 days. Its shares have gained 93.6% over the past six months. The company currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Waddell & Reed Financial, Inc.’s 2021 earnings estimates have increased 6.6% over the past 60 days. The company’s shares have gained 67.4% over the past six months. At present, it carries a Zacks Rank #2 (Buy).
The Goldman Sachs Group, Inc. (GS - Free Report) has witnessed an upward earnings estimate revision of 3.3% for the current year over the past 60 days. It currently carries a Zacks Rank of 2. The stock has gained 65.1% over the past six months.
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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4 Reasons to Invest in Credit Acceptance (CACC) Stock Now
It seems to be a wise idea to add Credit Acceptance Corporation (CACC - Free Report) stock to your portfolio now. Strong fundamentals and good growth prospects make this stock a promising pick right now.
The Zacks Consensus Estimate for the company’s current-year and next-year earnings has been unchanged over the past seven days. It currently sports a Zacks Rank #1 (Strong Buy).
Looking at its price performance, shares of the company have gained 12% over the past six months compared with 59% growth recorded by the industry. Given the strength in its fundamentals and a top Zacks Rank, the price performance is expected to improve in the future.
Here are a few aspects that make Credit Acceptance an attractive investment option now.
Revenue Strength: Driven mainly by the continued rise in finance charges, the company’s revenues witnessed a five-year (2016-2020) compound annual growth rate of 14.6%.
Moreover, given a decent rise in dealer enrollments and active dealers, its top line is expected to improve. Credit Acceptance’s revenues are projected to grow 7.7% in 2021.
Earnings per Share (EPS) Growth: The company recorded EPS growth of 23.6% over the past three-five years (higher than the industry average of 12.1%). The upward trend in earnings is expected to continue in the near term. In 2021, earnings are projected to improve 15.2%, higher than the industry’s average growth of 14.3%.
Superior Return on Equity (ROE): Credit Acceptance’s ROE is 31.76%, significantly higher than the industry average of 17.47%. This indicates that the company reinvests its cash more efficiently compared with peers.
Steady Capital Deployments: Credit Acceptance believes in returning capital to shareholders through stock repurchases instead of paying dividends. In March 2020, it authorized an additional 3 million shares to be repurchased (in addition to the previous authorizations). As of Dec 31, 2020, the company had almost 2.5 million shares left to be repurchased. Despite having a substantial debt burden, its high cash flow generating business model and low capital expenditure are likely to help sustain share buybacks, going forward.
Other Key Picks
Hope Bancorp, Inc. (HOPE - Free Report) has witnessed an upward earnings estimate revision of 22% for 2021 over the past 60 days. Its shares have gained 93.6% over the past six months. The company currently flaunts a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Waddell & Reed Financial, Inc.’s 2021 earnings estimates have increased 6.6% over the past 60 days. The company’s shares have gained 67.4% over the past six months. At present, it carries a Zacks Rank #2 (Buy).
The Goldman Sachs Group, Inc. (GS - Free Report) has witnessed an upward earnings estimate revision of 3.3% for the current year over the past 60 days. It currently carries a Zacks Rank of 2. The stock has gained 65.1% over the past six months.
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 >>