Credit Acceptance Corp (CACC) surged on its latest earnings surprise, but is it too late to get into this Zacks #1 Rank (Strong Buy).
Company Description
Credit Acceptance Corp provides auto loans, regardless of credit ratings. Services are offered through auto dealers across the U.S.
Another Earnings Surprise
On Nov 1 Credit Acceptance reported its sixth consecutive earnings surprise when it posted third-quarter results. Earnings per share came in at $1.88, 13 cents above the Zacks Consensus Estimate. That came on a 24% increase in net income, to $49.1 million.
Revenue was up almost 20%, to $133.7 million.
Estimates Look Very Bullish
Analysts raised full-year forecast even more than the 13 cents they did not expect last quarter. The Zacks Consensus for 2011 rose from $6.78 to $7.05 on the news.
Next year’s estimates average $8.15, up from $7.61 after the surprise. In 2010 Credit Acceptance earned $5.35, so projected growth rates are at 32% and 16%, respectively.
Shares are Cheap
Even though earnings are showing excellent growth and continue to improve, the stock is still cheap. You can pick up CACC at 11 times next year’s estimates.
Late to the Party?
Even though shares have spiked in the past 6 weeks, the overall estimates trend looks like it should support the momentum.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
