Update shared on 19 Dec 2025
Analysts have modestly raised their price target on Credit Acceptance to $458.00 from $458, citing incremental adjustments to the discount rate and forward valuation assumptions, while maintaining a constructive view on revenue growth and profitability.
What's in the News
- The board authorizes a new share repurchase program allowing Credit Acceptance to buy back up to 2,000,000 shares, with no stated expiration, signaling ongoing capital return to shareholders (company announcement).
- A subsequent board action on September 29, 2025, formally approves a new buyback plan framework, reinforcing management’s commitment to share repurchases (company announcement).
- From July 1, 2025, to September 30, 2025, the company repurchases 230,064 shares, or 2.05 percent of shares outstanding, for $106.39 million. This brings cumulative repurchases under the August 24, 2023, program to 1,838,933 shares, or 15.3 percent, for $921.17 million (buyback update).
- An executive leadership transition is announced, with long-time CEO and President Kenneth S. Booth set to retire as of January 31, 2026, while remaining on the board. Director Vinayak R. Hegde is appointed as the next CEO effective November 13, 2025, bringing a background in digital transformation and consumer growth from roles at T Mobile, Wheels Up, Airbnb, Groupon, and Amazon (executive change filing).
Valuation Changes
- Fair Value Estimate: Held steady at approximately $458 per share, reflecting no material change in the modeled intrinsic value.
- Discount Rate: Risen slightly from about 10.78 percent to roughly 10.86 percent, modestly increasing the required return applied to future cash flows.
- Revenue Growth Assumption: Essentially unchanged at around 31.95 percent, indicating no shift in expectations for top line expansion.
- Net Profit Margin: Remains effectively flat at about 18.51 percent, signaling stable expectations for underlying profitability.
- Future P/E Multiple: Increased slightly from roughly 9.50x to about 9.52x, reflecting a marginally higher valuation multiple on expected earnings.
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