Credit Acceptance shares surge after Q1 net income rises 6%

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Automotive finance company Credit Acceptance Corp. enjoyed a good day in the markets on Tuesday after it said first-quarter net income rose 6 percent.

The subprime auto lender saw its stock rally about 20 percent Tuesday after it beat analysts’ estimates on adjusted earnings per share and overall revenue upon announcing its first quarter earnings Monday evening. The stock closed at more than $621.88 per share Tuesday.

Credit Acceptance’s stock is up nearly 50 percent from this time last year, but down slightly year-to-date.

All told, the company reported $214.3 million in profit last quarter off $455.7 million in revenue. That’s despite a decrease in loan volume in the early part of the year, both in terms of unit and dollar volumes, which declined 22 percent and 10.5 percent, respectively, when compared against the first quarter of last year.

Much of that is due to added “noise” so far this year, according to Credit Acceptance’s Chief Treasury Officer Doug Busk.

The company “had a tough (comparison) versus January of last year due to federal stimulus dollars,” Busk said in a Monday earnings call, according to a transcript.

“You know, comparing the rest of the quarter was a little bit difficult. February is very good. But I think there’s differences in the timing and tax season, and then in March we had another tough comp due to stimulus dollars last year,” Busk told analysts, saying he expects an upward trajectory for the start of the new quarter.

“There’s a bit of noise in the quarter … so I think that the April data point is a relevant one.”

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