Credit Acceptance Corp. (NASDAQ:CACC) Posts Mixed Q3 2025 Results with EPS Beat and Revenue Miss

Credit Acceptance Corp. (NASDAQ:CACC) reported financial results for the third quarter of 2025, delivering earnings that surpassed analyst expectations while revenue fell short of forecasts. The company's performance reflects a complex quarter marked by strong profitability per share but challenges in top-line growth and a continued decline in loan origination volume.

Earnings and Revenue Performance Versus Estimates

The subprime auto lender posted adjusted earnings per share of $10.28 for the quarter, exceeding the analyst consensus estimate of $9.64. This represents a solid earnings beat and demonstrates the company's ability to maintain profitability in a challenging environment.

However, the company reported revenue of $582.4 million, which came in below the estimated $604.7 million. This revenue miss highlights the ongoing pressure on the company's core business activities.

Key financial comparisons versus estimates include:

• Adjusted EPS: Reported $10.28 vs. Estimated $9.64
• Revenue: Reported $582.4 million vs. Estimated $604.7 million

Market Reaction and Price Action

Following the earnings release, the market's reaction has been muted to slightly negative in the immediate aftermath. The stock showed no significant movement in after-hours trading. Over recent weeks, leading up to the report, the stock had experienced a downward trend.

Recent performance figures:

• Last Week: -8.4%
• Last Two Weeks: -6.5%
• Last Month: -4.2%

This pre-earnings weakness suggests that investors may have been anticipating a mixed quarter or reacting to broader sector concerns, with the lack of a positive after-hours move indicating the earnings beat was likely already priced in or offset by concerns over the revenue miss and other operational challenges.

Third Quarter Operational Highlights

The earnings report revealed several important operational trends. The company achieved a 3.9% year-over-year increase in its average loan portfolio balance to $8.0 billion. However, this growth was overshadowed by significant declines in new loan assignments.

Operational challenges included:

• Consumer Loan assignment unit volume declined 16.5% compared to Q3 2024
• Consumer Loan assignment dollar volume declined 19.4% compared to Q3 2024
• Forecasted collection rates declined, reducing forecasted net cash flows by $58.6 million

CEO Ken Booth commented on the results, stating, "We are pleased to report growth in adjusted EPS despite the challenging competitive landscape and difficult collection environment." He emphasized that the company's business model is designed to produce acceptable returns even when loan performance is worse than forecasted.

Capital Allocation and Legal Matters

The company continued its shareholder-friendly capital allocation policy, repurchasing approximately 230,000 shares during the quarter for $107.4 million, representing 2.0% of shares outstanding at the beginning of the period.

A notable item affecting results was a $15.0 million contingent loss related to previously disclosed legal matters, which the company excluded from its adjusted results. The company disclosed it has made a settlement offer of $45.0 million to resolve multi-state and New York Attorney General legal matters.

Looking Ahead

While the company did not provide specific quantitative forward guidance in the press release, analysts currently estimate full-year 2025 revenue of $2.39 billion and Q4 2025 revenue of $610.98 million. The company's focus remains on its product initiatives and technology modernization, which have allowed for faster enhancement delivery to dealers.

For detailed earnings estimates and future projections, view the earnings and estimates page for Credit Acceptance.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The author holds no position in CACC stock. Readers should conduct their own research and consult with a financial advisor before making any investment decisions.