Credit Acceptance (CACC): Evaluating the Latest Valuation After Recent Share Price Movements

Credit Acceptance (CACC) shares have moved slightly over the past week, catching the interest of investors who track price swings for new insights. With the stock still up about 8% over the past year, there is a story here worth watching.

See our latest analysis for Credit Acceptance.

Credit Acceptance's share price has experienced some short-term swings, but with a 1-year total shareholder return of 8.4% and a 5-year total return above 43%, momentum has largely held up even as broader market sentiment shifts. Despite a recent dip, performance over the long run points to consistent value creation for investors.

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With Credit Acceptance posting robust annual revenue growth and solid long-term returns, the key question now is whether the current share price leaves room for upside or if the market has already factored in future expansion. Is there still a buying opportunity?

Most Popular Narrative: 5% Overvalued

Credit Acceptance's last close of $492.87 stands above the narrative's fair value estimate of $467.50, pointing to limited upside potential. This puts the spotlight on what the narrative expects for future company growth amid current pricing pressures.

The recent investments in technology modernization, including a revamped loan origination system and accelerated feature development, should improve customer and dealer experiences, drive operating efficiency, and support net margin improvement through cost reductions. Adoption of more advanced data analytics and ongoing scorecard updates are expected to enhance risk assessment and loan performance over coming vintages. This may reduce future default rates and help stabilize or expand net margins and earnings.

Read the complete narrative.

Want to know what bold financial projections could put this price target within reach? The consensus narrative includes aggressive growth assumptions resting on margin shifts and revamped technology, with a future profit multiple that diverges from the sector trend. Find out which estimates drive this story below.

Result: Fair Value of $467.50 (OVERVALUED)

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

However, persistent loan underperformance or intensified competition from other lenders could undermine Credit Acceptance's projected growth and challenge the optimistic outlook.

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

Another View: Are Market Multiples Too Optimistic?

While the consensus valuation pegs Credit Acceptance as only modestly overvalued, market multiples tell a more cautionary tale. Its price-to-earnings ratio sits at 13.1x, making it pricier than both industry peers at 10.3x and its fair ratio of 15.4x. This suggests valuation risk if market expectations cool. Could investors be overestimating growth momentum?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Credit Acceptance Narrative

Keep in mind that if you have a different perspective or want to investigate further, you can craft your own narrative in just a few minutes using our platform: 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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