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Credit Acceptance (CACC) Slips 3.7% Despite Q3 Earnings Beat

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Credit Acceptance Corporation’s (CACC - Free Report) third-quarter 2021 earnings of $15.79 per share comfortably surpassed the Zacks Consensus Estimate of $11.95. The bottom line also reflects a 16.4% increase from the prior-year quarter. These figures include certain non-recurring items.

Results were primarily aided by an increase in revenues and a solid loan balance. However, higher expenses and a decline in provision benefit were the undermining factors. Perhaps due to these concerns, shares of the company declined 3.7% in aftermarket trading.

Excluding non-recurring items, net income (non-GAAP basis) was $219.1 million or $13.84 per share, up from $167 million or $9.36 per share in the prior-year quarter.

GAAP Revenues Improve, Expenses Rise

Total revenues were $470.1 million, up 10.2% year over year. The increase was mainly driven by a rise in finance charges and premiums earned. The top line also beat the Zacks Consensus Estimate of $456.7 million.

Provision for credit losses was a benefit of $8.3 million compared with $29.8 million in the year-ago quarter.

Operating expenses of $96.4 million rose 19.9%. Higher salaries and wages led to the increase.

As of Sep 30, 2021, net loans receivable were $6.6 billion, down 3% from the December 2020 level. Total assets were $7.2 billion as of the same date, down from $7.5 billion as of Dec 31, 2020. Total stockholders’ equity was $2 billion, down 15.1%.

Share Repurchase Update

During the quarter, Credit Acceptance repurchased 1.3 million shares.

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.
 

Currently, Credit Acceptance sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Performance of Other Consumer Loan Providers

Ally Financial’s (ALLY - Free Report) third-quarter 2021 adjusted earnings of $2.16 per share surpassed the Zacks Consensus Estimate of $1.96. The bottom line showed a rise of 72.8% from the year-ago quarter’s number.

Sallie Mae (SLM - Free Report) , formally known as SLM Corporation, reported third-quarter 2021 core earnings per share of 24 cents, which handily surpassed the Zacks Consensus Estimate of 17 cents. The bottom line compared unfavorably with 45 cents reported in the prior-year quarter.

Capital One’s (COF - Free Report) third-quarter 2021 adjusted earnings of $6.86 per share easily surpassed the Zacks Consensus Estimate of $5.22. The bottom line improved 36% from the year-ago quarter.