Nasdaq:CACC
CREDIT ACCEPTANCE CORP
A specialized finance provider offering installment auto loans to subprime dealerships and consumers with strong operational cash flow.
Key Metrics
Investment Thesis
Bull Case
CACC offers an attractive income profile for value-oriented investors seeking exposure to the subprime auto lending market with consistent cash flow generation of over $1B. The company's strong balance sheet, evidenced by $845M in beginning cash and substantial gross profits, provides a buffer against economic volatility while share repurchases signal confidence in intrinsic value.
Bear Case
Investors should be cautious regarding the company's high interest expense of nearly $463M which compresses net margins and leaves profitability vulnerable to rate hikes. The substantial reduction in cash reserves from $845M to $22.8M for cash equivalents indicates aggressive capital return strategies that may limit future liquidity if credit losses escalate.
About CREDIT ACCEPTANCE CORP
Credit Acceptance Corp (CACC) is a leading North American finance company specializing in providing installment loans primarily to subprime automobile dealerships and consumers. The company generates revenue through interest income on its large portfolio of auto loans while managing credit risk across the automotive sector. Its financial model focuses on high-yield lending with significant cash flow generation from operations exceeding $1 billion annually.
Analysis
Management Discussion
Recent financial performance demonstrates robust operational resilience with operating cash flow reaching $1.05B and a substantial gross profit of $2.32B despite elevated interest expenses of $462.9M. While the company reported a net profit increase to $423.9M in 2025 compared to previous years, investors note the significant cash outflow from financing activities totaling -$724.6M driven by share repurchases.
Industry Overview
The subprime auto finance industry serves a critical niche by providing credit access to borrowers and dealerships excluded from traditional banking channels, creating a high-yield but higher-risk asset class. Market dynamics are heavily influenced by used vehicle pricing trends, macroeconomic conditions affecting consumer debt servicing capacity, and the regulatory landscape governing non-bank lenders.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $1.83B | $1.90B | $2.16B | $2.32B |
| Cost of Revenue | $0 | $0 | $0 | $0 |
| Gross Profit | $1.83B | $1.90B | $2.16B | $2.32B |
| Operating Expenses | $1.12B | $1.53B | $1.83B | $1.75B |
| Operating Income | $711.7M | $367.6M | $329.5M | $565.4M |
| G&A | $88.7M | $87.2M | $97.9M | $161.4M |
| Marketing | $75.6M | $91.7M | $94.4M | $101.4M |
| Stock-Based Comp | $36.5M | $39.1M | $45.0M | $50.7M |
| Depreciation | $9.0M | $8.9M | $6.7M | $3.6M |
| Other OpEx | $956.4M | $1.36B | $1.64B | $1.49B |
| Non-Operating Income | $0 | $0 | $0 | $0 |
| Interest Expense | $166.6M | $266.5M | $419.5M | $462.9M |
| Pre-Tax Income | $711.7M | $367.6M | $329.5M | $565.4M |
| Income Tax | $175.9M | $81.5M | $81.6M | $141.5M |
| Continuing Ops | $535.8M | $286.1M | $247.9M | $423.9M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $535.8M | $286.1M | $247.9M | $423.9M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $535.8M | $286.1M | $247.9M | $423.9M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Cash & Equivalents | $7.7M | $13.2M | $343.7M | $22.8M |
| PP&E (Net) | $51.4M | $46.5M | $14.7M | $12.6M |
| Total Assets | $6.90B | $7.61B | $8.85B | $8.63B |
| Total Liabilities | $5.28B | $5.86B | $7.11B | $7.11B |
| Shareholders' Equity | $1.62B | $1.75B | $1.75B | $1.52B |
| Retained Earnings | $1.38B | $1.48B | $1.41B | $1.12B |
| AOCI | $-2.9M | $-1.0M | $-300.0K | $1.0M |
| Total L&E | $6.90B | $7.61B | $8.85B | $8.63B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $535.8M | $286.1M | $247.9M | $423.9M |
| Non-Cash Adjustments | $721.6M | $774.7M | $782.0M | $635.6M |
| Working Capital Changes | $-18.7M | $143.0M | $108.0M | $-4.9M |
| Cash from Operations | $1.24B | $1.20B | $1.14B | $1.05B |
| Capital Expenditures | $3.1M | $4.0M | $1.8M | $1.6M |
| Cash from Investing | $-460.6M | $-1.42B | $-1.72B | $-674.3M |
| Share Buybacks | $784.5M | $202.6M | $313.3M | $725.4M |
| Cash from Financing | $-794.6M | $266.2M | $957.3M | $-724.6M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $-16.5M | $53.2M | $374.1M | $-344.3M |
| Beginning Cash | $434.2M | $417.7M | $470.9M | $845.0M |
| Ending Cash | $417.7M | $470.9M | $845.0M | $500.7M |
Frequently Asked Questions
How does CREDIT ACCEPTANCE CORP make money?
The company's revenue is derived primarily from interest income on its vast portfolio of automobile installment loans, secured by vehicles provided through partnerships with major OEMs and independent dealerships across North America.
What are the main risks for CACC?
The company faces significant exposure to rising interest rate environments which can impact net interest margins, potential deterioration in auto loan default rates during economic downturns, sensitivity to used vehicle valuation declines affecting collateral recovery, and regulatory changes regarding lending practices.
What is CACC's competitive advantage?
CACC leverages deep industry relationships with original equipment manufacturers (OEMs) to secure high-quality collateral, utilizes proprietary data analytics for rigorous underwriting of subprime borrowers, and maintains a diversified loan portfolio that mitigates single-dealer concentration risk.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.