Credit Acceptance Corporation, founded in 1972, is a provider of financing programs to automobile dealers that enable them to sell vehicles to consumers, regardless of their credit history. The Company’s financing programs are offered through a nationwide network of automobile dealers who benefit from sales of vehicles to consumers who otherwise could not obtain financing; from repeat and referral sales generated by these same customers; and from sales to customers responding to advertisements. Credit Acceptance has two programs: the Portfolio Program and the Purchase Program. Under the Portfolio Program, it advances money to Dealer-Partners (referred to as a Dealer Loan) in exchange for the right to service the underlying Consumer Loans. Under the Purchase Program, Credit Acceptance buys the Consumer Loans from the Dealer-Partners (referred to as a Purchased Loan) and keeps all amounts collected from the consumer. Dealer Loans and Purchased Loans are collectively referred to as Loans.
Credit Acceptance’s target market is approximately 56,000 independent and franchised automobile dealers in the United States. Once a Dealer-Partner has enrolled in the Company’s programs, the market area managers work with the newly enrolled Dealer-Partners to help them launch its programs within their dealerships. Once a Dealer-Partner has enrolled in the Company’s programs, the Dealer-Partner may begin assigning Consumer Loans to it. A Consumer Loan is originated by the Dealer-Partner when a consumer enters into a contract with a Dealer-Partner that sets forth the terms of the agreement between the consumer and the Dealer-Partner for the payment of the purchase price of the vehicle. The amount of the Consumer Loan consists of the total principal and interest that the consumer is required to pay over the term of the Consumer Loan. In the majority of states, Consumer Loans are written on a contract form provided by the Company.
All Consumer Loans submitted to the Company for assignment are processed through its Credit Approval Processing System (CAPS). CAPS allow Dealer-Partners to input a consumer’s credit application and view the response from it through the Internet. CAPS allow Dealer-Partners to receive an approval from the Company, and interact with its credit scoring system to optimize the structure of each transaction prior to delivery. All responses include the amount of funding, as well as any stipulations required for funding. The amount of funding is determined using a formula, which considers a number of factors, including the timing and amount of cash flows expected on the related Consumer Loan and its target return on capital at the time the Consumer Loan is assigned.
Credit Acceptance’s credit scoring system forecasts the collection rate based upon the historical performance of Consumer Loans in the Company’s portfolio that share similar characteristics. While a dealer-partner can assign any legally compliant Consumer Loan to it, the decision whether to provide funding to the dealer-partner and the amount of any funding is made by the Company. The Company performs all functions relating to the processing of the Consumer Loan applications and bear certain costs of Consumer Loan assignment, including the cost of assessing the adequacy of Consumer Loan documentation, compliance with underwriting and legal guidelines and the cost of verifying employment, residence and other information provided by the dealer-partner.
The Company provides dealer-partners the ability to offer vehicle service contracts to consumers. VSC Re Company (VSC Re), its wholly owned subsidiary, is engaged in the business of reinsuring coverage under vehicle service contracts sold to consumers by Dealer-Partners on vehicles financed by the Company. It also has relationships with TPAs that allow Dealer-Partners to offer a Guaranteed Asset Protection (GAP) product to consumers whereby the TPA processes claims that are underwritten by a third party insurer. GAP provides the consumer protection by paying the difference between the loan balance and the amount covered by the consumer’s insurance policy in the event of a total loss of the vehicle due to severe damage or theft. The Company receives a fee for all GAP contracts sold by its Dealer-Partners when the vehicle is financed by the Company, and do not bear any risk of loss for claims.
Markets Daily - May 20, 2015
WKRB News - May 19, 2015
OctaFinance.com - May 12, 2015
Credit Acceptance Announces Extension of Revolving Secured Warehouse Facility - Benzinga
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Please note the Technical Indicators and Fundamental Factors listed below will fluctuate as market prices change.
- 100% Technical buy signals
- Trend Spotter buy signal
- Above its 20, 50 and 100 day moving averages
- 8 new highs and up 21.50% in the last month
- Relative Strength Index 80.27%
- Technical support level at 208.25
- Recently traded at 236.20 with a 50 day moving average of 196.14
- Market Cap: $4.87 Billion
- P/E: 17.33
- EPS: $13.33
- Dividend: $0.00
- Dividend Yield: NA
- Beta: 0.74
- Revenue expected to grow 6.00% this year and another 4.50% next year
- Earnings estimated to increase 9.70% this year, an additional 6.30% next year and continue to increase at an annual rate of 10.15% for the next 5 years
- Wall Street analysts think it may have peaked with 6 hold, 2 under perform a 1 sell recommendation on the stock
- Buy: 0
- Outperform: 0
- Hold: 5
- Underperform: 2
- Sell: 1
- No Opinion: 0