Credit Acceptance faces cautionary signals following its first-quarter earnings, with analysts pointing to sluggish long-term revenue growth of just 2.7% annually over five years and earnings per share expanding at only 1.3% per year. The company also carries a heavy debt load, reporting $6.41 billion in debt against just $25.7 million in cash, resulting in a net-debt-to-EBITDA ratio of 9.9 times. Despite a 35.6% stock return over the past six months that outpaced the S&P 500 by 27.3 percentage points, the shares now trade at 12.7 times forward earnings, suggesting much of the good news is already priced in. Analysts recommend looking elsewhere for better opportunities.
Credit Acceptance CorporationWeak revenue and EPS growth, high debt, and fully valued shares after Q1 earnings