Wendy A Rummler At Credit Acceptance Decides to Exercises Options Worth $330K

Highlighted on February 6, it was unveiled in an SEC filing that Rummler, Chief People Officer at Credit Acceptance CACC, executed a significant transaction involving the exercise of company stock options.

What Happened: A notable Form 4 filing on Tuesday with the U.S. Securities and Exchange Commission revealed that Rummler, Chief People Officer at Credit Acceptance, exercised stock options for 1,500 shares of CACC, resulting in a transaction value of $330,855.

During Wednesday's morning session, Credit Acceptance shares down by 0.0%, currently priced at $554.51. Considering the current price, Rummler's 1,500 shares have a total value of $330,855.

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 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. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Financials sector.

Interpreting Earnings Metrics:

• Gross Margin: Achieving a high gross margin of 65.87%, the company performs well in terms of cost management and profitability within its sector.

• Earnings per Share (EPS): With an EPS below industry norms, Credit Acceptance exhibits below-average bottom-line performance with a current EPS of 7.33.

Debt Management: The company faces challenges in debt management with a debt-to-equity ratio higher than the industry average. With a ratio of 2.89, caution is advised due to increased financial risk.

Understanding Financial Valuation:

• Price to Earnings (P/E) Ratio: Credit Acceptance's current Price to Earnings (P/E) ratio of 25.27 is higher than the industry average, indicating that the stock may be overvalued according to market sentiment.

• Price to Sales (P/S) Ratio: With a higher-than-average P/S ratio of 3.94, Credit Acceptance's stock is perceived as being overvalued in the market, particularly in relation to sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an impressive EV/EBITDA ratio of 39.71, Credit Acceptance demonstrates exemplary market valuation, surpassing industry averages.

Market Capitalization: Boasting an elevated market capitalization, the company surpasses industry averages. This signals substantial size and strong market recognition.

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Why Insider Transactions Are Key in Investment Decisions

Insider transactions should be considered alongside other factors when making investment decisions, as they can offer important insights.

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

The initiation of a new purchase by a company insider serves as a strong indication that they expect the stock to rise.

However, insider sells may not always signal a bearish view and can be influenced by various factors.

A Closer Look at Important Transaction Codes

When analyzing transactions, investors tend to focus on those in the open market, detailed 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.