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Credit Acceptance (CACC) Up as Q1 Earnings Beat, Revenues Rise
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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.
Credit Acceptance Corporation Price, Consensus and EPS Surprise
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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Credit Acceptance (CACC) Up as Q1 Earnings Beat, Revenues Rise
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.
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 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.