Credit Acceptance (CACC): Fresh Buyback Authorization Sparks New Valuation Debate After Earnings

Credit Acceptance, a US-based auto finance company, has just unveiled a new share repurchase program, approving the buyback of up to two million shares. This move follows its recent earnings announcement and sends a clear message to investors.

See our latest analysis for Credit Acceptance.

Credit Acceptance’s buyback announcement comes at a pivotal time, as the company has also extended a major debt facility and navigated an earnings shortfall. While the share price has remained relatively stable year-to-date, investors have seen a 1-year total shareholder return above 10%. This hints at steady long-term value creation and renewed management confidence.

If Credit Acceptance’s buyback has you scanning the broader auto finance space, this could be the moment to explore what’s trending among other lenders and manufacturers. Discover See the full list for free.

Given the mixed signals around earnings and the company’s aggressive buyback strategy, the question now is whether Credit Acceptance stock is trading at a bargain or if the market has already factored future growth into its price.

Most Popular Narrative: 3% Overvalued

Credit Acceptance's most widely followed narrative suggests the fair value is slightly below the last close, hinting that the current trading price tops analyst projections. This positions the company in a tough spot between bullish long-term revenue optimism and the realities of recent profitability pressures.

Ongoing growth in the non-prime borrower segment and persistent income inequality in the U.S. are likely to support stable or increasing demand for Credit Acceptance's auto loan products. This could expand the company's addressable market and sustain long-term revenue growth.

Read the complete narrative.

Want to know the numbers behind this pricing puzzle? Revenue surges are baked into the forecast, but slimmed-down margins and profit multiples could flip the outlook. See which surprising assumptions are shaping this call and what big financial levers might shift the balance.

Result: Fair Value of $467.50 (OVERVALUED)

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

However, continued weakness in loan performance or a slowdown in subprime loan origination could quickly undermine this outlook and change the narrative.

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

Another View: Market Multiples Tell a Different Story

Looking through the lens of earnings multiples, Credit Acceptance trades at 12.7 times earnings, a notable premium to both its industry peers at 10 times and the market’s fair ratio of 14.9x. While cheaper than the broader market, this higher-than-peer price suggests investors could be taking on greater valuation risk. Could the stock’s next move break from consensus?

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

Build Your Own Credit Acceptance Narrative

If you see the story differently or want to dive deeper into the data yourself, you can craft your own perspective in just a few 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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