Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Credit Acceptance (NASDAQ:CACC) and the best and worst performers in the consumer finance industry.
Consumer finance companies provide loans and credit products to individuals. Growth drivers include increasing consumer spending, financial inclusion initiatives in developing markets, and digital lending platforms reducing distribution costs. Challenges include credit risk during economic downturns, regulatory scrutiny of lending practices, and intensifying competition from traditional banks and fintech firms offering innovative credit solutions.
The 19 consumer finance stocks we track reported a very strong Q2. As a group, revenues beat analysts’ consensus estimates by 4.5% while next quarter’s revenue guidance was 1.5% below.
In light of this news, share prices of the companies have held steady as they are up 4.5% on average since the latest earnings results.
Credit Acceptance (NASDAQ:CACC)
Founded in 1972 by Donald Foss to serve customers overlooked by traditional lenders, Credit Acceptance (NASDAQ:CACC) provides auto financing solutions that enable car dealers to sell vehicles to consumers with limited or impaired credit histories.
Credit Acceptance reported revenues of $583.8 million, up 48.5% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a significant miss of analysts’ EPS estimates.
Interestingly, the stock is up 7.6% since reporting and currently trades at $527.
Read our full report on Credit Acceptance here, it’s free.
Best Q2: Nelnet (NYSE:NNI)
Starting as a student loan servicer in the 1970s and evolving through the changing landscape of education finance, Nelnet (NYSE:NNI) provides student loan servicing, education technology, payment processing, and banking services while managing a portfolio of education loans.
Nelnet reported revenues of $516.1 million, up 61% year on year, outperforming analysts’ expectations by 36.2%. The business had an incredible quarter with a beat of analysts’ EPS estimates.
Nelnet scored the biggest analyst estimates beat among its peers. However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $124.77.
Is now the time to buy Nelnet? Access our full analysis of the earnings results here, it’s free.
Slowest Q2: Sallie Mae (NASDAQ:SLM)
Originally created as a government-sponsored enterprise before privatizing in 2004, Sallie Mae (NASDAQ:SLM) is a financial services company that provides private education loans, savings products, and educational resources to help students and families pay for college.
Sallie Mae reported revenues of $403.6 million, down 21.5% year on year, in line with analysts’ expectations. It was a softer quarter as it posted a significant miss of analysts’ EPS estimates.
Sallie Mae delivered the slowest revenue growth in the group. As expected, the stock is down 8.2% since the results and currently trades at $29.39.
Read our full analysis of Sallie Mae’s results here.
Affirm (NASDAQ:AFRM)
Founded by PayPal co-founder Max Levchin with a mission to create honest financial products, Affirm (NASDAQ:AFRM) provides a payment network that allows consumers to make purchases and pay for them over time with transparent, flexible installment loans.
Affirm reported revenues of $876.4 million, up 33% year on year. This number beat analysts’ expectations by 4.7%. Overall, it was a stunning quarter as it also recorded a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
The stock is up 1.9% since reporting and currently trades at $81.49.
Read our full, actionable report on Affirm here, it’s free.
FirstCash (NASDAQ:FCFS)
Offering a financial lifeline to the unbanked and credit-constrained since 1988, FirstCash (NASDAQ:FCFS) operates pawn stores across the U.S. and Latin America while also providing retail point-of-sale payment solutions for credit-constrained consumers.
FirstCash reported revenues of $830.6 million, flat year on year. This result topped analysts’ expectations by 1%. It was a strong quarter as it also produced a beat of analysts’ EPS estimates and a decent beat of analysts’ EBITDA estimates.
The stock is up 10.4% since reporting and currently trades at $147.55.
Read our full, actionable report on FirstCash here, it’s free.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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