Erin J Kerber At Credit Acceptance Capitalizes: Options Exercised, Resulting In $1.08M

In a new SEC filing on February 6, it was revealed that Kerber, Chief Legal Officer at Credit Acceptance CACC, executed a significant exercise of company stock options.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission on Tuesday showed that Kerber, Chief Legal Officer at Credit Acceptance, a company in the Financials sector, just exercised stock options worth 4,875 shares of CACC stock with an exercise price of $333.94.

The latest update on Wednesday morning shows Credit Acceptance shares down by 0.0%, trading at $554.51. At this price, Kerber's 4,875 shares are worth $1,075,278.

Get to Know Credit Acceptance Better

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 the largest source of revenue.

Unraveling the Financial Story of Credit Acceptance

Revenue Growth: Credit Acceptance's revenue growth over a period of 3 months has faced challenges. As of 31 December, 2023, the company experienced a revenue decline of approximately 0.0%. This indicates a decrease in the company's top-line earnings. When compared to others in the Financials sector, the company faces challenges, achieving a growth rate lower than the average among peers.

Profitability Metrics: Unlocking Value

• Gross Margin: The company sets a benchmark with a high gross margin of 65.87%, reflecting superior cost management and profitability compared to its peers.

• Earnings per Share (EPS): Credit Acceptance's EPS is below the industry average, signaling challenges in bottom-line performance with a current EPS of 7.33.

Debt Management: Credit Acceptance's debt-to-equity ratio surpasses industry norms, standing at 2.89. This suggests the company carries a substantial amount of debt, posing potential financial challenges.

Insights into Valuation Metrics:

• Price to Earnings (P/E) Ratio: Credit Acceptance's stock is currently priced at a premium level, as reflected in the higher-than-average P/E ratio of 25.27.

• Price to Sales (P/S) Ratio: A higher-than-average P/S ratio of 3.94 suggests overvaluation in the eyes of investors, considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): A high EV/EBITDA ratio of 39.71 positions the company as being more valued compared to industry benchmarks.

Market Capitalization: Surpassing industry standards, the company's market capitalization asserts its dominance in terms of size, suggesting a robust market position.

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Why Insider Transactions Are Key in Investment Decisions

Insider transactions contribute to decision-making but should be supplemented by a comprehensive investment analysis.

Exploring the legal landscape, an "insider" is defined as any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as stipulated by Section 12 of the Securities Exchange Act of 1934. This encompasses executives in the c-suite and major hedge funds. These insiders are required to report their transactions through a Form 4 filing, which must be submitted within two business days of the transaction.

Highlighted by a company insider's new purchase, there's a positive anticipation for the stock to rise.

But, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

Important Transaction Codes

For investors, a primary focus lies on transactions occurring in the open market, as indicated in Table I of the Form 4 filing. A P in Box 3 denotes 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.