Thomas W Smith, 10% Owner at Credit Acceptance CACC, executed a substantial insider sell on September 11, according to an SEC filing.

What Happened: Smith’s decision to sell 1,200 shares of Credit Acceptance was revealed in a Form 4 filing with the U.S. Securities and Exchange Commission on Wednesday. The total value of the sale is $541,208.

Monitoring the market, Credit Acceptance‘s shares down by 0.0% at $420.93 during Thursday’s morning.

About Credit Acceptance

Credit Acceptance Corp is a consumer finance company that specializes in automobile loans. These loans are offered through a U.S. nationwide network of automobile dealers that benefit from sales of vehicles to consumers who could otherwise not obtain financing. The company also benefits from repeat and referral sales, and from sales to customers responding to advertisements for financing, but qualify for traditional financing. The company derives its revenue from finance charges, premiums earned on the reinsurance of vehicle service contracts, and other fees. Of these, financing charges, including servicing fees, are by far a source of revenue.

Financial Milestones: Credit Acceptance’s Journey

Revenue Growth: Credit Acceptance’s revenue growth over a period of 3 months has been noteworthy. As of 30 June, 2024, the company achieved a revenue growth rate of approximately 12.42%. This indicates a substantial increase in the company’s top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Financials sector.

Navigating Financial Profits:

• Gross Margin: The company sets a benchmark with a high gross margin of 62.24%, reflecting superior cost management and profitability compared to its peers.

• Earnings per Share (EPS): With an EPS below industry norms, Credit Acceptance exhibits below-average bottom-line performance with a current EPS of -3.83.

Debt Management: Credit Acceptance’s debt-to-equity ratio surpasses industry norms, standing at 3.82. This suggests the company carries a substantial amount of debt, posing potential financial challenges.

Valuation Metrics:

• Price to Earnings (P/E) Ratio: The Price to Earnings ratio of 30.04 is lower than the industry average, indicating potential undervaluation for the stock.

• Price to Sales (P/S) Ratio: The current P/S ratio of 2.7 is above industry norms, reflecting an elevated valuation for Credit Acceptance’s stock and potential overvaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): At 40.63, the company’s EV/EBITDA ratio outperforms industry norms, reflecting positive market perception. This positioning indicates optimistic expectations for the company’s future performance.

Market Capitalization: With restricted market capitalization, the company is positioned below industry averages. This reflects a smaller scale relative to peers.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

Delving Into the Significance of Insider Transactions

While insider transactions provide valuable information, they should be part of a broader analysis in making investment decisions.

In legal terms, an “insider” refers to any officer, director, or beneficial owner of more than ten percent of a company’s equity securities registered under Section 12 of the Securities Exchange Act of 1934. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Understanding Crucial Transaction Codes

In the domain of transactions, investors frequently turn their focus to those taking place in the open market, as meticulously outlined in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S signifies a sale. Transaction code C signals the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of Credit Acceptance’s Insider Trades.

This article was generated by Benzinga’s automated content engine and reviewed by an editor.