Credit Acceptance (CACC) Q2 Earnings Top Estimates, Costs Up
Zacks Investment Research | Jul 30, 2019 09:32PM ET
Credit Acceptance Corporation’s (NASDAQ:CACC) second-quarter 2019 earnings of $8.68 per share handily outpaced the Zacks Consensus Estimate of $8.49. Moreover, the bottom line compared favorably with $7.75 reported a year ago. Notably, the figure includes certain non-recurring items.
Increase in revenues supported results. Moreover, the balance sheet remained strong during the second quarter. However, an increase in expenses along with rise in provision for credit losses remained headwinds.
Excluding the non-recurring items, net income (non-GAAP basis) was $162.9 million or $8.60 per share, up from $135.4 million or $6.95 per share in the prior-year quarter.
Revenues Improve, Expenses Rise
Total revenues were $370.6 million, up 17.5% year over year. This increase was attributable to rise in all three revenue components. Also, the reported figure beat the Zacks Consensus Estimate of $360.1 million.
Operating expenses of $81.8 million rose 17.5% from the year-ago quarter. This rise was due to an increase in all components of expenses.
Credit Quality Deteriorates
Provision for credit losses increased significantly from the year-ago quarter to $15.4 million. Moreover, allowance for credit losses at the end of the reported quarter was $489.6 million, up from $461.9 million as of Dec 31, 2018.
Strong Balance Sheet
As of Jun 30, 2019, net loans receivable amounted to $6.4 billion, increasing from $5.8 billion as of Dec 31, 2018.
Total assets were $6.9 billion as of the same date, increasing from $6.2 billion on Dec 31, 2018. Also, total stockholders’ equity was $2.2 billion, up 11.3% from the end of December 2018.
Our Take
Credit Acceptance is well poised for growth in revenues, given the continued rise in consumer loans. Furthermore, backed by a solid capital position, the company is expected to enhance shareholder value through continued share repurchases. However, persistently increasing expenses might hurt its bottom-line growth to some extent.
Credit Acceptance Corporation Price, Consensus and EPS Surprise
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