(CACC) Credit Acceptance - Ratings and Ratios

Credit Acceptance Corporation (CACC) is a leading player in the subprime auto lending industry, specializing in providing financing solutions to consumers through partnerships with automobile dealerships. The companys model revolves around advancing funds to dealers in exchange for the rights to service consumer loans, and purchasing these loans outright, retaining the collected amounts. This approach allows CACC to generate revenue through interest and fees associated with these loans.

CACC also diversifies its offerings by reinsuring coverage under vehicle service contracts sold by dealers on vehicles financed through the company. This not only broadens their revenue streams but also enhances their risk management strategies. Their primary clients are independent dealers, which sets them apart from larger financiers who often prefer franchised dealerships.

With a market capitalization exceeding $6 billion, CACC is a substantial entity in the consumer finance sector. The companys financial health is highlighted by a P/E ratio of 26.11, indicating a premium valuation, while a forward P/E of 13.89 suggests anticipated growth. The P/B ratio of 3.58 reflects a higher market valuation compared to book value, likely due to strong profit margins. Their P/S ratio of 7.27 underscores their revenue efficiency.

CACCs competitive edge is bolstered by a proprietary scoring model that evaluates subprime borrowers, ensuring a balance between risk and return. Their consistent profitability and scalable business model position them as a resilient player in the consumer finance industry, particularly in the subprime auto lending space.