Credit Acceptance’s third quarter results were shaped by a notable decline in revenue and unit originations, driven largely by increased competition and lower advance rates stemming from a 2024 scorecard change. Management highlighted underperforming loan vintages from 2022 to 2024, which weighed on loan performance. CEO Kenneth Booth acknowledged these challenges, stating, “Loan performance declined this quarter with our 2022, 2023 and 2024 vintages underperforming our expectations." Despite these headwinds, the company’s loan portfolio remained at a record high, offering some stability amidst the difficult backdrop.

Is now the time to buy CACC? Find out in our full research report (it’s free for active Edge members).

While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Credit Acceptance’s Q3 Earnings Call

• John Rowan (Janney Montgomery Scott) asked about asset-backed securities covenants and potential early amortization triggers. CFO Jay Martin clarified that there are no securitizations close to the 90% trigger and that collection rates remain above 100%.
• Robert Wildhack (Autonomous Research) questioned whether Credit Acceptance was seeing any competitors pull back in subprime lending. CEO Kenneth Booth said, "Overall, while there have been some that have had struggles and have pulled back, in general, the environment is very competitive right now."
• Ryan Shelley (Bank of America) sought clarity on the impact of tariffs and potential future scorecard changes. Booth explained that tariffs negatively affect affordability for their consumers, and future scorecard adjustments will depend on market conditions and performance trends.
• Moshe Orenbuch (TD Cowen) probed on the reasons behind lower volume and market share, as well as prepayment trends. Booth cited intense competition and affordability issues, while Martin noted that prepays could rise if competition remains elevated.
• Kyle Joseph (Stephens) asked about capital markets access and investor sentiment. Treasurer Douglas Busk responded that Credit Acceptance maintains strong liquidity and has seen solid demand for its latest asset-backed securities issuance.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) any shifts in competitive intensity within subprime auto financing, (2) changes to the company’s loan origination scorecard and their effect on volumes and credit quality, and (3) the pace and impact of technology modernization initiatives. Developments in consumer affordability and regulatory or legal updates could also significantly influence future performance.

Credit Acceptance currently trades at $451.39, in line with $453.61 just before the earnings. In the wake of this quarter, is it a buy or sell? See for yourself in our full research report (it’s free for active Edge members).

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