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Auto Loan Demand Aids Credit Acceptance (CACC) Amid Cost Woes
Credit AcceptanceCredit Acceptance(US:CACC) ZACKSยท2024-06-06 14:35

Core Viewpoint - Credit Acceptance Corporation (CACC) is positioned for growth in auto loans, supported by increased dealer enrollments and a robust share buyback policy, although elevated expenses and concerns over credit quality and debt levels may impact profitability [1][7][10]. Financial Performance - CACC's revenues have shown a compound annual growth rate (CAGR) of 10.1% from 2016 to 2023, with continued growth expected in Q1 2024 [5]. - In Q1 2024, finance charges constituted 92.4% of total revenues, with projections indicating total GAAP revenues will rise by 9.5% in 2024, 6.3% in 2025, and 3.7% in 2026 [6]. Expenses and Profitability - The company has experienced a CAGR of 10.4% in operating expenses from 2017 to 2023, driven by increases in salaries, wages, and marketing expenses [8][11]. - Total expenses are projected to grow at a CAGR of 5.2% over the next three years [8]. Debt and Liquidity - As of March 31, 2024, CACC had total debt of $5.60 billion, significantly higher than cash and cash equivalents of $667.5 million, but maintains sufficient liquidity to meet near-term obligations [10]. Shareholder Returns - CACC prioritizes capital return through stock repurchases, having authorized an additional 2 million shares for buyback in August 2023, with 1.5 million shares remaining as of March 31, 2024 [7].