Credit Acceptance (CACC) Margin Strength Challenges Bearish Credit Risk Narratives

Credit Acceptance (CACC) just closed out FY 2025 with fourth quarter revenue of US$336.5 million and basic EPS of US$11.18, backed by trailing twelve month revenue of about US$1.2 billion and EPS of US$37.02. The company has seen quarterly revenue move from US$254.4 million in Q3 FY 2024 to US$336.5 million in Q4 FY 2025, while basic EPS stepped from US$6.42 to US$11.18 over the same stretch, framing a story in which improving profitability and a 34.2% trailing net margin shape how investors may interpret this latest report.

See our full analysis for Credit Acceptance.

With the headline numbers on the table, the next step is to see how this earnings picture lines up with the widely followed bull and bear narratives around Credit Acceptance, and where the data starts to challenge those stories.

See what the community is saying about Credit Acceptance

71% earnings growth and 34.2% margin reshape the recent trend

• Over the last 12 months, net income reached US$423.9 million with a 34.2% trailing net margin, compared with a 26.7% margin in the prior year and 71% earnings growth over that period.
• Consensus narrative talks about credit pressure from weaker 2022 to 2024 loan vintages and tougher competition. Yet the recent 34.2% margin and US$423.9 million of trailing net income show profitability that sits alongside those concerns, which may prompt investors to ask how long that margin profile can coexist with the credit risks highlighted.

Valuation sits above DCF fair value and peer P/E

• At a share price of US$483.98, the stock is above the DCF fair value of about US$311.86 and trades on a 12.3x P/E, compared with roughly 8x for peers and the industry and below the wider US market at 19.6x.
• Critics highlight that returns are only modestly above an 7.4% cost of capital and that leverage is not well covered by operating cash flow. The combination of a higher P/E than peers and a price above the DCF fair value of US$311.86 aligns with that cautious view by pointing to a balance sheet that investors may want to scrutinize against the current valuation.

Have a look at how skeptics frame the downside case around debt coverage and valuation tension in the 🐻 Credit Acceptance Bear Case

Short term strength versus 5 year earnings slide

• While earnings grew 71% over the past year and analysts forecast about 13.5% annual earnings growth and 31.2% annual revenue growth, the 5 year average earnings change is a 23.3% decline per year, which shows a very different multi year picture.
• What stands out for bulls is that recent momentum in earnings and the 34.2% margin support arguments about improved efficiency and data analytics. Yet the 5 year earnings decline and earlier commentary about loan performance and competition challenge any bullish claim that the current growth rates alone resolve past pressure on returns.

Bulls point to the recent earnings surge and margin strength as a turning point, and you can see how that argument is built in the 🐂 Credit Acceptance Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Credit Acceptance on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? Take a couple of minutes to put your own view on record and turn this earnings snapshot into your own narrative with Do it your way

A great starting point for your Credit Acceptance research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

See What Else Is Out There

Credit Acceptance blends recent margin strength with a 5 year earnings slide, higher P/E than peers and concerns about leverage coverage, which may leave you questioning the balance sheet.

If that mix of valuation tension and debt worries has you wanting steadier footing, check out solid balance sheet and fundamentals stocks screener (45 results) to quickly focus on companies with stronger financial backing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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