Research · Sep 3, 2026
[CACC] Credit Acceptance Thesis 2026: Buyback Compounding vs. FTC Lawsuit and Credit Cycle Risk
Credit Acceptance's FY2025 showed managed receivables ~$22.5B and finance charge income ~$2.15B as the dealer advance/holdback actuarial model continued generating ~20-25% ROE. Adj. EPS ~$40.90 on ~13.2M diluted shares (down from ~16.8M in FY2019 via consistent buybacks). FY2026 thesis: FTC lawsuit resolution (structural vs. disclosure-only remedy) determines whether the buyback compounding engine continues at current pace or slows. Bull case: settlement without structural program changes + used vehicle price stabilization → re-rate from 8-10x to 13-16x EPS. Bear case: operational impairment from FTC injunction requiring advance rate transparency that undermines dealer economics.