Credit Acceptance (CACC): Valuation Check After Low-Cost $500m Financing and Insider Share Sale

Credit Acceptance (CACC) just locked in a $500 million asset backed non recourse secured financing at its lowest cost since 2021, even as its Chief Sales Officer offloaded a sizable block of shares.

See our latest analysis for Credit Acceptance.

The mixed signals of lower cost funding and insider selling come as volatility cools, with a roughly 7 percent 1 month share price return but a slightly negative 1 year total shareholder return, suggesting only modest long term momentum so far.

If this kind of nuanced setup interests you, it could be a good moment to widen your watchlist and explore fast growing stocks with high insider ownership.

With shares still below last year’s levels but trading near analyst targets, the key question now is whether Credit Acceptance is quietly undervalued or if the market is already pricing in its next leg of growth.

Most Popular Narrative: 3.1% Overvalued

With Credit Acceptance last closing at $472.21 against a narrative fair value of $458, the story leans only slightly rich, setting up a finely balanced case.

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 know what powers that jump in revenue, earnings and the future multiple, and how buybacks reshape the math, while margins quietly shift underneath it all?

Result: Fair Value of $458 (OVERVALUED)

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

However, persistent credit underperformance and intensifying competition in subprime auto lending could quickly undermine the growth, margin, and valuation assumptions behind this narrative.

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

Build Your Own Credit Acceptance Narrative

If you see the story differently or simply prefer to dig into the numbers yourself, you can build a complete narrative 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.

Looking for more investment ideas?

Before you move on, lock in your next opportunities using the Simply Wall St Screener so you are not relying on just one story or stock.

• Capture potential multi baggers early by targeting these 3611 penny stocks with strong financials that already show strong balance sheets and improving fundamentals.
• Ride the next wave of intelligent automation by zeroing in on these 26 AI penny stocks shaping everything from data analytics to real time decision making.
• Strengthen your core portfolio by focusing on these 13 dividend stocks with yields > 3% that can boost income while still offering room for sensible growth.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com