CACC's Q2 Earnings Lag on High Costs, Finance Charges Provide Support

Credit Acceptance Corporation’s CACC second-quarter 2025 adjusted earnings per share of $8.56 lagged the Zacks Consensus Estimate of $9.84. Also, the bottom line declined 18.6% year over year.

Results were hurt by an increase in operating expenses. On the other hand, higher finance charges, growth in net loan receivable and a fall in provisions were the tailwinds. 

Including the non-recurring items, net income was $87.4 million or $7.42 per share against a net loss of $47.1 million or $3.83 per share in the prior-year quarter.

CACC’s GAAP Revenues Up, Operating Expenses Rise

Total GAAP revenues for the reported quarter were $583.8 million, up 8.5% year over year. Increased finance charges and other income supported revenue growth. However, the top line missed the Zacks Consensus Estimate of $585 million.

Provision for credit losses was $172.6 million, plunging 46.2%. 

Operating expenses of $155.5 million surged 25%. 

As of June 30, 2025, net loans receivable were $8 billion, up 1.9% from December 2024-end.

Total assets were $8.72 billion as of the same date, down from $8.85 billion as of Dec 31, 2024. Total shareholders’ equity was $1.55 billion, down from $1.75 billion as of Dec 31, 2024.

Share Repurchase Update for CACC

During the reported quarter, Credit Acceptance repurchased roughly 0.53 million shares.

Our Take on Credit Acceptance

Mounting expenses are expected to hurt Credit Acceptance’s bottom-line growth. Moreover, weak asset quality because of a tough operating backdrop might hamper financials. However, the company is well-positioned for revenue growth, given the gradual increase in demand for consumer loans.
 

Credit Acceptance Corporation Price, Consensus and EPS Surprise

Credit Acceptance Corporation price-consensus-eps-surprise-chart | Credit Acceptance Corporation Quote

Currently, Credit Acceptance carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of CACC’s Peers

Navient Corporation NAVI reported second-quarter 2025 adjusted earnings per share of 21 cents, missing the Zacks Consensus Estimate of 29 cents. It reported earnings of 48 cents in the prior-year quarter. Results excluded regulatory and restructuring-related expenses of 1 cent per share.

Results were affected by a decrease in net interest income (NII) and other income along with higher provision for loan losses. However, lower expenses acted as a tailwind for NAVI.

Capital One’s COF second-quarter 2025 adjusted earnings of $5.48 per share widely surpassed the Zacks Consensus Estimate of $3.83. The bottom line also compared favorably with $4.06 in the prior quarter.

COF’s results benefited from higher NII and non-interest income. Also, loans and deposits improved in the quarter. However, the increase in expenses and jump in provisions were undermining factors.

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This article originally published on Zacks Investment Research (zacks.com).

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