Assessing Credit Acceptance’s (CACC) Valuation After Recent Share Price Stabilisation

Credit Acceptance (CACC) has quietly pushed higher over the past month, even as the stock is still down over the past 3 months. That mix often flags shifting expectations beneath the surface.

See our latest analysis for Credit Acceptance.

Zooming out, Credit Acceptance’s modest 1 month share price return sits against a slightly negative year to date picture. A 5 year total shareholder return near 40% shows the longer term story still intact, suggesting momentum may be stabilising rather than breaking down.

If Credit Acceptance’s recent moves have you rethinking where the next opportunity might come from, it could be worth scouting other financial names with strong insider alignment through fast growing stocks with high insider ownership.

With shares drifting yet the business still growing, investors now face the key question: Is Credit Acceptance trading at a discount to its fundamentals, or has the market already priced in the next leg of growth?

Most Popular Narrative Narrative: 1.5% Overvalued

With Credit Acceptance last closing at $464.68 against a most-watched fair value of $458.00, the narrative points to only a marginal premium.

The analysts have a consensus price target of $467.5 for Credit Acceptance based on their expectations of its future earnings growth, profit margins and other risk factors.

In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.5 billion, earnings will come to $504.0 million, and it would be trading on a PE ratio of 11.3x, assuming you use a discount rate of 10.5%.

Read the complete narrative.

Want to see what underpins this near full pricing call? The story leans on aggressive top line expansion and resilient margins, all funneled into a tighter earnings multiple. Curious which assumptions really carry the weight here? Dive in to unpack the numbers behind that fair value.

Result: Fair Value of $458 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, lingering credit underperformance and fiercer subprime competition could quickly undermine those growth assumptions and lead to lower earnings and valuation expectations.

Find out about the key risks to this Credit Acceptance narrative.

Build Your Own Credit Acceptance Narrative

If you see the outlook differently or want to stress test your own assumptions, you can build a complete view in minutes: Do it your way.

A great starting point for your Credit Acceptance research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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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