Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link. NEW YORK ( TheStreet) -- Credit Acceptance Corporation (Nasdaq: CACC) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk and weak operating cash flow.
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- CACC's revenue growth has slightly outpaced the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 11.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.58% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The gross profit margin for CREDIT ACCEPTANCE CORP is rather high; currently it is at 67.83%. 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 36.30% significantly outperformed against the industry.
- Although CACC's debt-to-equity ratio of 2.15 is very high, it is currently less than that of the industry average.
- Net operating cash flow has declined marginally to $59.80 million or 4.02% when compared to the same quarter last year. In conjunction, when comparing current results to the industry average, CREDIT ACCEPTANCE CORP has marginally lower results.