We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Credit Acceptance Sinks 19.3% Post Q3 Earnings: What's Hurting CACC?
Read MoreHide Full Article
Key Takeaways
CACC shares sank 19.3% after Q3 results amid weakening loan performance and rising credit costs.
CACC's credit loss provisions surged 170.3%, while projected loan cash flows fell $291.2 million.
CACC posted a $56.6 million GAAP net loss despite 37.7% loan assignment growth.
Credit Acceptance Corporation’s (CACC - Free Report) shares plunged 19.3% on Friday, following disappointing third-quarter 2026 results. The sharp decline was mainly due to deteriorating auto loan performance, downward revisions to expected loan collections and a substantial increase in credit loss provisions.
The company reduced its forecasted net cash flows from its loan portfolio by $291.2 million or 2.5% compared with a $58.6 million or 0.5% reduction in the year-ago quarter. The downward revision reflected weaker collection expectations for consumer loans assigned between 2022 and 2026, raising concerns about portfolio credit quality.
Further, provisions for credit losses surged 170.3% year over year to $410.9 million in the third quarter. Of this increase, $193.8 million was attributable to changes in loan cash flow forecasts, while $65.1 million resulted from higher provisions on new consumer loan assignments.
Consequently, in the third quarter, Credit Acceptance reported a GAAP net loss of $56.6 million or $5.43 per share against net income of $108.2 million or $9.43 per share in the prior-year quarter.
CACC’s quarterly revenues of $594.6 million rose 2.1% from the prior-year period, driven by higher finance charges. Further, adjusted earnings of $13.01 per share exceeded the Zacks Consensus Estimate of $11.94, while consumer loan assignment volumes increased 37.7% year over year. Despite these positives, investors appeared more concerned about deteriorating loan performance and reduced future cash flow expectations.
What Should Investors Do With CACC Stock?
Despite robust loan assignment growth and better-than-expected adjusted earnings, Credit Acceptance faces near-term challenges from weakening collection trends and elevated credit costs. Persistent underperformance among recent loan vintages could continue to pressure profitability and cash flow generation.
While expanding loan volumes support business growth, the company's ability to stabilize collection rates and contain credit losses will be crucial for regaining investor confidence. Investors may prefer to monitor credit performance trends and management's future cash flow revisions before taking a more constructive stance on CACC stock.
Over the past month, shares of Credit Acceptance have declined 12.5% against the industry’s growth of 2.7%.
Ally Financial (ALLY - Free Report) , which reported third-quarter results on Oct. 20, beat the Zacks Consensus Estimate. The company’s adjusted earnings of $1.34 per share topped the consensus estimate of $1.32 and improved from $1.15 in the year-ago quarter.
Results benefited from growth in net financing revenues, stable other revenues and lower expenses. However, higher provisions acted as an undermining factor for Ally Financial.
Enova International (ENVA - Free Report) , which announced quarterly numbers on Oct. 22, also surpassed the Zacks Consensus Estimate. The company’s third-quarter adjusted earnings of $4.48 beat the consensus estimate of $4.46 and grew 33% from the prior-year quarter.
Enova International posted revenue of $1.01 billion during a quarter for the first time in its history. Meanwhile, higher operating expenses and weakening asset quality weighed on the results.
View the Zacks #1 Rank List
Image: Bigstock
Credit Acceptance Sinks 19.3% Post Q3 Earnings: What's Hurting CACC?
Key Takeaways
Credit Acceptance Corporation’s (CACC - Free Report) shares plunged 19.3% on Friday, following disappointing third-quarter 2026 results. The sharp decline was mainly due to deteriorating auto loan performance, downward revisions to expected loan collections and a substantial increase in credit loss provisions.
The company reduced its forecasted net cash flows from its loan portfolio by $291.2 million or 2.5% compared with a $58.6 million or 0.5% reduction in the year-ago quarter. The downward revision reflected weaker collection expectations for consumer loans assigned between 2022 and 2026, raising concerns about portfolio credit quality.
Further, provisions for credit losses surged 170.3% year over year to $410.9 million in the third quarter. Of this increase, $193.8 million was attributable to changes in loan cash flow forecasts, while $65.1 million resulted from higher provisions on new consumer loan assignments.
Consequently, in the third quarter, Credit Acceptance reported a GAAP net loss of $56.6 million or $5.43 per share against net income of $108.2 million or $9.43 per share in the prior-year quarter.
CACC’s quarterly revenues of $594.6 million rose 2.1% from the prior-year period, driven by higher finance charges. Further, adjusted earnings of $13.01 per share exceeded the Zacks Consensus Estimate of $11.94, while consumer loan assignment volumes increased 37.7% year over year. Despite these positives, investors appeared more concerned about deteriorating loan performance and reduced future cash flow expectations.
What Should Investors Do With CACC Stock?
Despite robust loan assignment growth and better-than-expected adjusted earnings, Credit Acceptance faces near-term challenges from weakening collection trends and elevated credit costs. Persistent underperformance among recent loan vintages could continue to pressure profitability and cash flow generation.
While expanding loan volumes support business growth, the company's ability to stabilize collection rates and contain credit losses will be crucial for regaining investor confidence. Investors may prefer to monitor credit performance trends and management's future cash flow revisions before taking a more constructive stance on CACC stock.
Over the past month, shares of Credit Acceptance have declined 12.5% against the industry’s growth of 2.7%.
Image Source: Zacks Investment Research
At present, CACC carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Have CACC’s Peers Performed in Q3?
Ally Financial (ALLY - Free Report) , which reported third-quarter results on Oct. 20, beat the Zacks Consensus Estimate. The company’s adjusted earnings of $1.34 per share topped the consensus estimate of $1.32 and improved from $1.15 in the year-ago quarter.
Results benefited from growth in net financing revenues, stable other revenues and lower expenses. However, higher provisions acted as an undermining factor for Ally Financial.
Enova International (ENVA - Free Report) , which announced quarterly numbers on Oct. 22, also surpassed the Zacks Consensus Estimate. The company’s third-quarter adjusted earnings of $4.48 beat the consensus estimate of $4.46 and grew 33% from the prior-year quarter.
Enova International posted revenue of $1.01 billion during a quarter for the first time in its history. Meanwhile, higher operating expenses and weakening asset quality weighed on the results.