Credit Acceptance Corp. Stock Analysis

Credit Acceptance Corporation is a finance company and helps car dealers to sell their cars to the consumers on credit. What makes CAC different from others? CAC doesn't care about your credit history or grade. Risky business but extremely profitable.

Why I choose this company; Because I strongly believe that in 2015, CAC will become better and perform better. CAC is in the middle of it's 52-week Performance. Highest Price was $168 and Lowest Price was $110. CAC's currently stock price is $138 but I believe that It will show better results in 2015.
Why? Let's analyze.

Firstly, I would like to start with Balance Sheet & Income Statement

As you can see in the table below, CAC's Cash and Short Term Investments increased quarter by quarter and reached the peak this year. When we look at the `Short/Long-Term Debt` of Credit Acceptance Corporation, we can see that Short-Term Debt of CAC is $114,2 million which is less than current cash ($200 million) and that makes this stock more secure.

Income Statement shows us how Credit Acceptance Corporation is doing well actually. From March 2014 to September 2014, CAC's net income increased by $30 million and reached the peak of 2 years.

Of course, Credit Acceptance Corporation's Financial Security is not like Apple or Bank America but according to their situation in the market, this level is quite well. So, My Financial Security Grade is 7/10.

Company's current ratios look good. P/E ratio is 12.17 and future P/E ratio will be 11.40. So, in 2015, stock will be more undervalued than this year. CAC's PEG ratio is 0,44 which makes it acceptable and undervalued again.

We have to consider the ratios(P/E and PEG) of the indurstry. Ratios can not show us direct results but I think we can look and understand the situation of the stock a little from them. So, my P/E&PEG Ratio Grade is 6/10.

Credit Acceptance Corporation is not the market leader. American Express Company is the leader of the market with $96 billion and CAC's market cap. is just $3 billion.

Even though, there is a huge different between the market leader and Credit Acceptance Corporation, CAC is still one of the biggest companies in the market. Therefore, my Market Capitilization Grade is 7/10.

In Conclusion

Credit Acceptance Corporation stock doesn't shine or `strong buy` but still, I expect good results from them because they are strong, they manage situations good and their industry market grows rapidly. My final grade to the company is 6,5/10 which makes it `Risky Buy`.