CREDIT ACCEPTANCE CORP (CACC): what the price assumes

boothcheck covers CREDIT ACCEPTANCE CORP (CACC) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-09-07 · Exported: 2026-09-09 · Source: https://boothcheck.com/report/CACC

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

How unusual the bet is: n/a

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.9%); the inversion above states its own rate.

Per-Model Detail (n=15)

Solvency

Bullet Takeaways

• Credit Acceptance finances car buyers that banks turn away, and it does it by advancing money to the dealer against forecast collections rather than by underwriting the borrower alone, an arrangement that produced a return on book equity near 30% over the trailing year.
• The company grades its own underwriting in public, and the FY2025 10-K reports that forecasted collection rates improved for Consumer Loans assigned in 2020 and 2025, declined for Consumer Loans assigned in 2022 through 2024, three consecutive vintages revised down.
• Loan assignment volume is the number to watch: it fell to $3,856.1 million in 2025 from $4,147.8 million in 2023 even as the count of active dealers rose, so each dealer relationship is carrying less business than it used to.

Bull Case

The market is paying about 13 times trailing pre-tax operating profit here, roughly what it pays for lenders it expects to plod along. The economics underneath do not look like plodding. Over the trailing year the company earned close to a 30% return on its book equity, against a cost of equity in the low nines, and it did that in a corner of consumer credit where most balance sheets refuse to compete at all.

The reason it can is structural, and it starts with who takes the first loss. Credit Acceptance mostly does not underwrite the borrower and hope. It advances cash to the dealer against a pool of loans, services the paper, and pays the dealer the remainder only after the advance and the servicing fee have been recovered from actual collections. The dealer's profit therefore depends on whether the dealer's own customers pay. Under the second of its two arrangements the company takes the paper outright, and the FY2025 10-K states the mechanics in one line: Under the Purchase Program, we buy the Consumer Loans from the Dealers (referred to as a "Purchased Loan") and keep all amounts collected from the consumer. Access to that arrangement is rationed, granted to dealers that have already assigned at least 50 loans through the shared-risk program or that are franchise dealerships. The company lets dealers earn their way into the better deal.

What makes the model durable is the feedback loop bolted onto it. Every month, and every year in print, the company checks its own forecasts against what borrowers actually paid. The 10-K describes it plainly: We monitor and evaluate Consumer Loan performance on a monthly basis by comparing our current forecasted collection rates to our initial expectations. And it explains why that comparison is the whole game: By comparing our current expected collection rate for each Consumer Loan with the rate we projected at the time of assignment, we are able to assess the accuracy of our initial forecast. A subprime lender that publishes the scorecard on its own credit judgment, vintage by vintage, is handing investors the one disclosure that matters most and is hardest to fake. On the newest vintage the scorecard reads well: the 2025 assignments were revised up during the year.

Capital allocation has been the quiet compounder. The share count has come down at roughly 6.5% a year on average between March 2022 and March 2026. Pair a shrinking denominator with a return on equity near 30% and book value per share, $138.22 at the latest count, climbs on two engines at once. Nothing here depends on a new product or a new market. It depends on the company continuing to do what it does and buying back the rest.

Against its cohort the profitability comparison is favorable rather than merely adequate. OMF converts about 18.7 cents of each revenue dollar into net profit on $4.252 billion of revenue; ALLY converts about 16.5 cents on $8.475 billion; ENVA, growing faster than either at 17.5%, converts about 10 cents. Credit Acceptance converts a shade under 20 cents on a revenue base a fraction the size of ALLY's. The bull argument is not that this is a growth company. It is that a business earning these returns, shrinking its own share count, and priced where the value-based methods already land does not need growth to work.

Bear Case

Everyone with a balance sheet wants this business back. The FY2025 10-K names the field without flinching: automobile financing is large and highly competitive. The market is currently served by "buy here, pay here" dealerships, banks, captive finance affiliates of automobile manufacturers, credit unions, and independent finance companies both publicly and privately owned. Many of these companies are much larger and have greater resources than us. ALLY alone carries $8.475 billion of revenue, growing 9.7%, against a subject revenue base of roughly $2.3 billion; OMF carries $4.252 billion growing 8.8%; LC is growing at 25.4%. Bigger competitors in this market do not usually attack on the interest rate, because the borrower is not shopping on rate. They attack on how much cash the dealer gets up front, and the 10-K spells out exactly what that costs: Increasing advance rates on Loans has the impact of reducing the return on capital we expect to earn on Loans. Competitive pressure arrives here as a slow leak in returns, not as a visible price war.

The leak may already be showing. Dollar volume of consumer loans assigned fell to $3,856.1 million in 2025 from $4,147.8 million in 2023, while the number of active dealers on the platform rose over the same span. More storefronts, less business through each of them, is what a company looks like when it is holding onto distribution by adding partners faster than it is losing volume.

Now put that against what the price requires. At $574.72 the market is underwriting company-wide operating growth running at roughly the 25% annual ceiling the balance sheet can fund out of its own earnings, and holding there for something close to seven years. Revenue grew about 4.6% over the trailing year. Of comparable fast-growing companies that have reached that pace, only about one in five sustained it for seven years. If that assumption reverts toward the delivered rate, nothing about the business breaks, but the multiple the market is willing to pay compresses toward where the peer-multiple approaches already sit, which is well under today's price.

The mechanism that would cause the reversion is written into the disclosure. This company's earnings are a forecast until the loans finish paying, and the 10-K says so: There can be no assurance that our forecasts will be accurate or that Consumer Loan performance will be as expected. The record is mixed on exactly that point. Collection rates on the 2022, 2023 and 2024 assignments were all revised down during 2025. Three consecutive marked-down vintages is not a crisis, but it is the specific pattern that turns a reported return on equity into a number that shrinks in arrears.

Funding is the other pressure point, and it is tighter than the profitability suggests. Pre-tax operating income covers the interest bill only about 1.3 times, which for a lender is not a distress signal so much as a statement of what the business actually is: borrowed money is the raw material, and the spread between what it costs and what borrowers pay is the product. Squeeze that spread and there is little cushion. The 10-K is explicit about the dependency: If our various financing alternatives were to become limited or unavailable, we may be unable to maintain or grow Consumer Loan volume at the level that we anticipate and our operations could be materially adversely affected.

Sitting behind all of it is a regulatory file that has been open for a decade. The 10-K discloses that we received a subpoena from the Attorney General of the State of Maryland restating most of the requests contained in the March 18, 2016 and April 3, 2020 subpoenas, making additional requests, and expanding the inquiry to include 41 other states. A multi-state inquiry into how a subprime lender originates and collects is not the kind of thing that resolves into a rounding error, and its cost is not in any forecast the company publishes.

Valuation

Work backward from $574.72 and the assumption becomes specific. The market is capitalizing the company at roughly 13 times its trailing pre-tax operating profit, and that multiple holds together only if company-wide operating growth runs at about the 25% a year ceiling the balance sheet can self-fund, and keeps running there for close to seven years. Only about one in five comparable fast-growers has sustained that pace over such a span. Set against a company whose revenue grew about 4.6% over the trailing year, that is a demanding path, and it is the one thing in this report that is genuinely stretched.

The valuation approaches themselves are unusually close to agreement, which is not what a stretched multiple usually looks like. The price sits about 6% above where the asset-value methods land and about 4% above the earnings-power methods, and both the peer-multiple approaches and the forward-growth approaches reach above today's price. Every lens supports the price at some level. Read together, this prices as a value-supported financial rather than a growth bet, with the demanding assumption sitting in the growth path rather than in the level.

The excess-return approach is worth naming because it is the one built for a lender. It starts from book value of $138.22 a share, adds a fixed run of years in which the trailing return on equity near 30% keeps beating the 9.3% cost of equity, then lets that advantage converge away. Even with the convergence, it lands above the current price. The most conservative asset-based screen, the one that multiplies earnings by book value and takes the square root of the product, lands well under the price, which is the honest boundary on the downside case rather than a target.

What has to be true, in plain terms, is that the underwriting keeps working. This is not a margin story. It is a collections story, and the collections are a forecast until they are cash. The FY2025 10-K gives the running scorecard: forecasted collection rates improved for Consumer Loans assigned in 2020 and 2025, declined for Consumer Loans assigned in 2022 through 2024. The direction of the newest vintage matters more for the forward case than the level of any trailing ratio.

On cohort position, the company sits in the lower half of the peer multiple range while out-earning most of the group per revenue dollar. OMF turns about 18.7 cents of revenue into net profit; ALLY about 16.5 cents; ENVA about 10 cents while growing 17.5%. The subject converts just under 20 cents. What the market is discounting is not the current profitability but its persistence.

The balance sheet is the constraint that decides how much of that persistence the company controls. It is not burning cash, and the share count has fallen at roughly 6.5% a year since March 2022, which is buyback deployment showing up where it cannot be disguised. But pre-tax operating income covers interest only about 1.3 times, and the filed volume table shows the raw material shrinking: $3,856.1 million of loan assignments in 2025 against $4,147.8 million in 2023. A lender whose cost of funds rises faster than its advance discipline improves loses on both sides of the spread at once, and that, rather than any multiple, is what the seven-year assumption is really resting on.

Catalysts

The next hard information arrives at the end of July. The company is scheduled to report its June quarter on July 31, 2026, the first print that will show whether the 2026 assignment run rate has turned up against the volume decline visible in the FY2025 filed disclosure. Three days before it, the finance function changes hands: Joe Billante becomes chief financial officer effective July 27, 2026, succeeding a retiring incumbent.

That handover is not ceremonial at a company built on borrowed money. Also in June 2026 the company extended its revolving secured line of credit facility, the kind of housekeeping that only becomes news when it fails to happen. With interest cover near 1.3 times pre-tax operating income, the terms on which this balance sheet renews its funding do more to the forward earnings path than any single quarter of loan volume, and the incoming finance chief inherits that job first.

The prior quarter was reported on May 5, 2026. Between then and the July print, the item worth tracking is the vintage table rather than the headline: whether the 2025 and 2026 assignments hold their improved collection forecasts, or whether they follow 2022 through 2024 into revision.

Peer Cohorts (Per Segment, With Filing Citations)

Core business (reported)

• OMF (ONEMAIN HOLDINGS, INC.)
• FY2025 10-K: …facilities, through our digital platform, or through third-party servicers. Servicing and collection activity is conducted and documented on systems that log and maintain a permanent record of all transactions and may also be used to assess a customer's future application. CENTRAL OPERATIONS We continually seek to…
• FY2025 10-K: …transactions; • types of products offered; and • reserve requirements for unearned premiums, losses, and other purposes. COMPETITION We operate in the consumer lending industry with a focus on serving nonprime consumers through our national branch network, central operations, affiliate partners, network of auto…
• BFH (Bread Financial Holdings, Inc.)
• FY2025 10-K: …a percentage of average credit card and other loans in the fourth quarter of 2024, and consequently these actions negatively impacted Net principal losses and Net principal losses as a percentage of average credit card and other loans in the second quarter of 2025. (2) Net principal losses and Net principal losses as…
• FY2025 10-K: …exploring various strategic business opportunities adjacent to our core co-brand and private label credit card business (business adjacencies) in an evolving payments, macroeconomic and regulatory environment. As of December 31, 2025, we had $18.8 billion in Credit card and other loans from approximately 34 million…
• SLM (SLM Corp)
• FY2025 10-K: -offs as a percentage of average loans in repayment and delinquencies as a percentage of loans in repayment. Operating Expenses The cost of operating our business directly affects our profitability. We strive to manage growth in our business in a prudent fashion by focusing on investments to improve efficiency and…
• FY2025 10-K: …fixed interest rates, creates sustainable, competitive loan products. However, increasing amounts of private education consolidation loans at interest rates below those of our existing portfolio - whether from private sources (including FinTech companies) or otherwise - can contribute to an increase in the prepayment…
• ENVA (Enova International, Inc.)
• FY2025 10-K: …financing repayment, while also providing excellent customer service. Our collections employees are trained to help the customer understand available payment alternatives and make arrangements to repay the loan or financing. We use a variety of collection strategies to satisfy a delinquent loan or finance receivable,…
• FY2025 10-K: …using period-end balances. (b) The average loan and finance receivable balance is the average of the month-end balances during the period. The combined ending loan balance, including principal and accrued fees/interest outstanding, of small business loans and finance receivables at December 31, 2025 increased 34.0%…
• LC (LendingClub Corporation)
• FY2025 10-K: …and/or marketplace investors. Many of our competitors have significantly greater financial resources and may have access to less expensive capital than we do, and may offer a broader range of products, services or features, assume a greater level of risk, have lower operating or financing costs, or have different…
• FY2025 10-K: …of loan customers use our personal loan product to refinance existing higher interest rate credit card debt into a lower interest rate personal loan with us. Lower interest rates on credit cards could be accompanied by a reduction in credit availability, which may present an opportunity for us to offer our personal…
• ECPG (ENCORE CAPITAL GROUP, INC.)
• FY2025 10-K: , debt purchasing and recovery segment, based on similarities among the operating units including economic characteristics, the nature of the services, the nature of the production process, customer types for their services, the methods used to provide their services and the nature of the regulatory environment. The…
• FY2025 10-K: …historical rates of return. Some of our competitors may obtain alternative sources of financing at more favorable rates than those available to us, the proceeds from which may be used to fund expansion and to increase the amount of charged-off receivables they purchase. We face bidding competition in our acquisition…
• NNI (NELNET, INC.)
• FY2025 10-K: 7,150 486,962 Cost of services 176,907 172,763 Represents direct costs to provide payment processing revenue and such costs decrease/increase in relationship to payment volumes. Costs to provide instructional services are also a component of this expense and decrease/increase in relationship to instructional services…
• FY2025 10-K: …of revenue beginning in the second quarter of 2024 from a new remote hosted servicing customer awarded a USDS contract. The Company continued to transfer volume through the end of 2025 to this new remote hosted servicing customer at the Department's direction to stand-up and establish the new servicer. The Company…
• ALLY (Ally Financial Inc.)
• FY2025 10-K: …loans), and service providers. If any of this information is intentionally or negligently misrepresented and the misrepresentation is not detected before completing the transaction, we may experience increased credit risk. Our ability to manage credit risk depends in part on the effectiveness of our loan and…
• FY2025 10-K: …with the 50th percentile in a distribution of possible economic outcomes. The consumer portfolio segments consist of loans that generally share similar risk characteristics within our Automotive Finance operations and our mortgage operations, which is included within Corporate and Other. Prior to the sale of our…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.