Credit Acceptance trades lower after Q2, trend also noticed among other auto lending stocks

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Credit Acceptance Corporation (CACC) is trading ~9% lower after posting Q2 results, a trend also noticed among other auto lending stocks such as Ally Financial (ALLY) and OneMain Holdings (OMF).

Ally Financial shares had dropped by ~5% after its Q2 earnings missed the consensus estimate as expenses increased and its provision for credit losses increased.

Similarly, OneMain Holdings was trading ~7% lower after reporting a miss on its Q2 consensus earnings.

Credit Acceptance’s Q2 non-GAAP EPS of $13.92 (vs. $13.71 in prior-year quarter) beats by $1.72, while revenue of $457.4M (-3.0% Y/Y) beats by $2.63M.

The company saw a decrease in forecasted collection rates for consumer loans assigned in 2020 through 2022. For Q2, the rate stood at 67.1% against an initial forecast of 67.6%.

“Loan performance, slightly underperformed our expectations this quarter,” Jay Martin, senior vice president of finance and accounting, said during the Q2 earnings call.

“It’s likely due to a few factors. Obviously, the end of stimulus and supplemental unemployment benefits, and perhaps it took a little while for consumers to work through the savings that they had accumulated during those programs. And then I think the other thing that’s impacting the consumer out there is just the inflationary environment,” Martin said.

Most of the company’s portfolio exists in the used car market.

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