Credit Acceptance
CACC
$594.18
-0.93%
Credit Acceptance Corp is a consumer finance company specializing in automobile loans, primarily serving subprime borrowers through a nationwide network of auto dealers. The company provides financing to consumers who otherwise cannot obtain traditional credit, generating revenue from finance charges, servicing fees, and reinsurance premiums. As a niche player in the subprime auto lending space, Credit Acceptance has established a strong competitive position through its dealer relationships and proprietary underwriting model. The current investor narrative centers on the company's robust profitability and growth, but is tempered by concerns over rising subprime auto loan delinquencies, which have reached their worst levels in 32 years, potentially pressuring asset quality and future earnings.…
CACC
Credit Acceptance
$594.18
Investment Opinion: Should I buy CACC Today?
Based on the analysis, CACC is rated a 'Hold' with a cautious tilt. The consensus analyst rating is 'Hold' with an average target price of $636.67, implying a 7.0% upside from the current price of $594.89. The thesis is that the stock is undervalued on a PE and PEG basis, but subprime credit risk and high leverage warrant a neutral stance.
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CACC 12-Month Price Forecast
The AI assessment is neutral, reflecting a balance between attractive valuation and significant credit risk. The stock's low PE and PEG suggest undervaluation, but the subprime delinquency headwind and high leverage temper enthusiasm. The stance would be upgraded to bullish if delinquency rates show clear improvement or if the stock drops to a more attractive valuation below $550. Conversely, a downgrade to bearish would occur if credit losses spike or revenue growth turns negative.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Credit Acceptance's 12-month outlook, with a consensus price target around $636.67 and implied upside of +7.2% versus the current price.
Average Target
$636.67
0 analysts
Implied Upside
+7.2%
vs. current price
Analyst Count
—
covering this stock
Price Range
$600 - $660
Analyst target range
Analyst coverage is limited, with only 3 analysts providing targets. The consensus recommendation is 'Hold' (based on recent actions: TD Cowen and Stephens & Co. maintain Hold/Equal Weight ratings). The average target price is $636.67, implying a 7.0% upside from the current price of $594.89. The target range is $600 to $660, with the low target near the current price and the high target suggesting 11% upside. The narrow spread of $60 indicates moderate conviction, but the limited coverage and lack of strong buy ratings suggest cautious sentiment, possibly due to subprime credit concerns. The recent downgrade from Sell to Hold by TD Cowen in July 2026 may signal improving sentiment, but the overall stance remains neutral.
Bulls vs Bears: CACC Investment Factors
Credit Acceptance presents a compelling value proposition with strong profitability, high margins, and a low valuation relative to growth, but faces significant headwinds from deteriorating subprime credit conditions and high leverage. The bull case is supported by solid fundamentals and a discounted valuation, while the bear case hinges on the risk of rising delinquencies and potential earnings pressure. Currently, the evidence slightly favors the bull side given the stock's low PE and PEG, but the key tension is whether subprime delinquency trends will stabilize or worsen, which would determine if the current valuation is a bargain or a value trap.
Bullish
- Strong Profitability with High Margins: Gross margin is exceptionally high at 98.9%, and operating margin is 48.9% as of Q1 2026, reflecting the asset-light nature of the lending business and strong operational efficiency. Net margin improved to 23.4% in Q1 2026 from 18.9% in the prior year quarter, indicating expanding profitability.
- Undervalued on Earnings and Growth: The trailing PE is 11.59x and forward PE is 10.73x, well below the industry average of 15x, implying a 23% discount. The PEG ratio of 0.13 suggests the stock is significantly undervalued relative to its earnings growth potential, making it attractive on a growth-adjusted basis.
- Solid Revenue Growth and Stability: Revenue grew 3.15% year-over-year in Q1 2026 to $580 million, with consistent sequential growth from $562.3 million in Q1 2025. The company has maintained revenue above $575 million for the past four quarters, demonstrating stability in its core lending operations.
- Positive Price Momentum and Recovery: The stock is up 16.64% over the past year and 25.72% over the past six months, trading near its 52-week high of $668.86. It has recovered strongly from its 52-week low of $401.90, showing investor confidence and positive momentum.
Bearish
- Subprime Delinquency Risk at 32-Year High: Subprime auto loan delinquencies have hit their worst level in 32 years, directly impacting CACC's core borrower base. This could lead to higher charge-offs and reduced asset quality, pressuring future earnings and potentially requiring higher loan loss provisions.
- High Leverage and Debt Burden: Debt-to-equity ratio is 4.17, indicating significant leverage. Interest expense of $108.4 million in Q1 2026 represents a substantial fixed cost, and any rise in interest rates or credit deterioration could amplify financial risk.
- Limited Analyst Coverage and Cautious Stance: Only 3 analysts cover the stock, with a consensus 'Hold' rating. The average target price of $636.67 implies just 7.0% upside, and the recent downgrade from Sell to Hold by TD Cowen suggests lingering concerns about subprime credit risk.
- High Beta and Market Sensitivity: Beta of 1.346 indicates the stock is more volatile than the market, amplifying downside moves during economic downturns. This is particularly relevant given the cyclical nature of subprime lending and sensitivity to macroeconomic conditions.
CACC Technical Analysis
Credit Acceptance's stock is in a strong uptrend, with a 1-year price change of +16.64% and a 6-month change of +25.72%. The current price of $594.89 sits at 88.9% of its 52-week range (between $401.90 and $668.86), indicating the stock is trading near its highs, reflecting positive momentum but also potential overextension. The stock has recovered significantly from its 52-week low, showing resilience and investor confidence in the company's fundamentals.
Beta
1.35
1.35x market volatility
Max Drawdown
-21.7%
Largest decline past year
52-Week Range
$402-$669
Price range past year
Annual Return
+15.4%
Cumulative gain past year
| Period | CACC Return | S&P 500 |
|---|---|---|
| 1m | +4.4% | +2.0% |
| 3m | +9.7% | +1.0% |
| 6m | +16.2% | +11.8% |
| 1y | +15.4% | +18.1% |
| ytd | +30.9% | +11.7% |
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CACC Fundamental Analysis
Revenue has grown steadily, with Q1 2026 revenue of $580 million, up 3.15% year-over-year, and consistent sequential growth from $562.3 million in Q1 2025. The company's net income of $135.8 million in Q1 2026 represents a net margin of 23.4%, up from 18.9% in the prior year quarter, indicating improving profitability. Gross margin remains exceptionally high at 98.9%, reflecting the asset-light nature of the lending business, though operating margin of 48.9% shows strong operational efficiency.
Quarterly Revenue
$580000000.0B
2026-03
Revenue YoY Growth
+3.1%
YoY Comparison
Gross Margin
98.9%
Latest Quarter
Free Cash Flow
$1.1B
Last 12 Months
Revenue & Net Income Trends (2 Years)
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Valuation Analysis: Is CACC Overvalued?
Given positive net income, the PE ratio is the primary valuation metric. The trailing PE is 11.59x, while the forward PE is 10.73x, suggesting the market expects earnings growth. The stock trades at a significant discount to the broader market, with a PEG ratio of 0.13, indicating undervaluation relative to growth. Compared to the industry average PE of 15x (estimated), CACC trades at a 23% discount, which may reflect concerns about subprime credit risk. Historically, the trailing PE has ranged from 6.6x to 74.7x over the past five years, with the current level near the lower end, suggesting the stock is undervalued relative to its own history.
PE
11.6x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 7x~26x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
10.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are significant. The company's debt-to-equity ratio of 4.17 indicates high leverage, and interest expense of $108.4 million in Q1 2026 is a substantial fixed cost that could strain earnings if credit losses rise. The current ratio of 0.26 suggests potential liquidity concerns, though this is typical for financial firms. Revenue concentration in subprime auto loans exposes the company to credit cycles, and any deterioration in asset quality could lead to higher provisions and reduced net income. The company's net margin of 18.3% (TTM) is healthy, but it could compress if delinquencies increase, as seen in the Q2 2024 loss when net income was -$47.1 million due to elevated credit costs.