Yahoo Finance Credit Acceptance (CACC) Q1 Earnings Miss on Higher Provisions
Credit Acceptance Corporation’s CACC first-quarter 2024 earnings of $5.08 per share missed the Zacks Consensus Estimate of $6.81. The bottom line reflects a 33.2% decline from the prior-year quarter. These figures include certain non-recurring items.
Results were primarily hurt by an increase in operating expenses and higher provisions. Nevertheless, improvements in GAAP revenues and consumer loan assignment volumes were positives.
Excluding non-recurring items, net income was $117.4 million or $9.28 per share, down from $127 million or $9.71 per share in the prior-year quarter.
GAAP Revenues Improve, Operating Expenses Rise
Total GAAP revenues were $508 million, up 11.9% year over year. An increase in finance charges and premiums earned supported revenue growth. The top line beat the Zacks Consensus Estimate of $495.3 million.
Provision for credit losses was $186 million in the reported quarter, up 35.4% year over year. Our estimate for the metric was $174.1 million.
Operating expenses of $126.1 million increased 7.5% year over year. We had projected operating expenses of $120.2 million.
As of Mar 31, 2024, net loans receivables were $7.35 billion, up 5.6% from the December 2023 level. Our estimate for the metric was $6.81 billion.
Total assets were $8.10 billion as of the same date, up from $7.61 billion as of Dec 31, 2023. Total shareholders’ equity was $1.65 billion, down 5.8% sequentially.
In the reported quarter, consumer loan assignment volumes in terms of units and dollar volumes rose 24.1% and 20.2%, respectively, on a year-over-year basis.
Our Take
Mounting expenses are expected to hurt Credit Acceptance’s bottom-line growth to an extent in the near term. Moreover, poor asset quality might hamper financials. Nevertheless, the company remains well-poised for revenue growth, given the gradual increase in demand for consumer loans.
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 first-quarter 2024 adjusted earnings of 45 cents per share surpassed the Zacks Consensus Estimate of 33 cents. However, the bottom line reflects a decline of 45.1% from the year-ago quarter.
ALLY’s results were primarily aided by an improvement in other revenues. However, a decline in net financing revenues, along with higher expenses and provisions, were the undermining factors.
Navient Corporation NAVI reported first-quarter 2024 adjusted earnings per share (excluding regulatory-related and restructuring expenses) of 63 cents, surpassing the Zacks Consensus Estimate of 58 cents. The company reported 86 cents in the prior-year quarter.
NAVI’s results were driven by a rise in total other income and a fall in expenses. However, a decline in net interest income affected the results.
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