Credit Acceptance (CACC) In A Perilous Reversal

Trade-Ideas LLC identified Credit Acceptance (CACC) as a "perilous reversal" (up big yesterday but down big today) candidate
By TheStreet Wire ,

Trade-Ideas LLC identified

Credit Acceptance

(

CACC

) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Credit Acceptance as such a stock due to the following factors:

  • CACC has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $45.3 million.
  • CACC has traded 56,718 shares today.
  • CACC is down 3% today.
  • CACC was up 8.1% yesterday.

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More details on CACC:

Credit Acceptance Corporation provides automobile dealers financing programs, and related products and services that enable them to sell vehicles to consumers. CACC has a PE ratio of 12. Currently there are no analysts that rate Credit Acceptance a buy, 2 analysts rate it a sell, and 4 rate it a hold.

The average volume for Credit Acceptance has been 157,500 shares per day over the past 30 days. Credit Acceptance has a market cap of $3.6 billion and is part of the financial sector and financial services industry. The stock has a beta of 0.63 and a short float of 22.6% with 6.66 days to cover. Shares are up 36.9% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Credit Acceptance as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, notable return on equity and solid stock price performance. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 4.2%. Since the same quarter one year prior, revenues rose by 15.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • CREDIT ACCEPTANCE CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CREDIT ACCEPTANCE CORP increased its bottom line by earning $12.01 versus $10.59 in the prior year. This year, the market expects an improvement in earnings ($14.19 versus $12.01).
  • The gross profit margin for CREDIT ACCEPTANCE CORP is rather high; currently it is at 65.79%. Regardless of CACC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, CACC's net profit margin of 35.20% significantly outperformed against the industry.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Consumer Finance industry average. The net income has remained constant at $74.00 million when compared to the same quarter one year ago.
  • After a year of stock price fluctuations, the net result is that CACC's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.

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