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Credit Acceptance (CACC) Q1 Earnings Beat, Provisions Down Y/Y

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Credit Acceptance Corporation’s (CACC - Free Report) first-quarter 2021 earnings of $11.82 per share comfortably outpaced the Zacks Consensus Estimate of $8.44. In the prior-year quarter, the company registered a net loss of $4.61 per share. These figures include certain non-recurring items.

Results were primarily aided by an increase in revenues and substantially lower provisions. Also, the company recorded an increase in loans in the quarter. However, higher expenses were the undermining factor.

Excluding non-recurring items, net income (non-GAAP basis) was $164.8 million or $9.64 per share, down from $175.7 million or $9.66 per share in the prior-year quarter.

GAAP Revenues Improve, Expenses Rise

Total revenues were $451 million, up 15.9% year over year. The increase was driven by a rise in finance charges and premiums earned. Moreover, the figure beat the Zacks Consensus Estimate of $427.9 million.

Provision for credit losses was $21.3 million, down 94% from $354.7 million in the year-ago quarter.

Operating expenses of $112.6 million rose 42.4% year over year. A significant rise in general and administrative costs resulted in the increase.

As of Mar 31, 2021, net loans receivable amounted to $6.9 billion, up from $6.8 billion recorded at the end of December 2020. Total assets were $7.7 billion as of the same date, up from $7.5 billion as of Dec 31, 2020. Total stockholders’ equity was $2.4 billion, up 2.9% from December 2020 end.

Our Take

Credit Acceptance remains well-poised for revenue growth, given the gradual increase in the demand for consumer loans. However, elevated expenses pose a major headwind.

Credit Acceptance Corporation Price, Consensus and EPS Surprise

 

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.

Earnings Release Dates of Other Finance Companies

Main Street Capital Corporation (MAIN - Free Report) and FS KKR Capital Corp. (FSK - Free Report) are scheduled to announce quarterly results on May 6 and May 10, respectively. Gladstone Investment Corporation (GAIN - Free Report) is scheduled to announce the March-end quarter’s results on May 11.

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