Validea's pick of the week provides a detailed report on a company that scores well in the stock-screening service's model portfolios. On Validea.ca, investors can analyze 1,000 Canadian stocks through 12 different guru-based models and get individual reports on each company. Globe Investor provides marketing and data services to Validea.ca and receives compensation. Try it.
Michigan-based Credit Acceptance Corp. provides auto loans to consumers through a network of dealer-partners. It has a market cap of $5-billion (U.S.).
The company has grown earnings at a 20-per-cent pace over the long term (using an average of the 3-, 4- and 5-year EPS growth rates), which the Peter Lynch based model likes. The Lynch model also likes its 0.87 PE-to-growth ratio. It has an equity/assets ratio of 28 per cent, far surpassing the Lynch model's 5-per-cent target.
Credit Acceptance has upped EPS in all but one year of the past decade, which the Warren Buffett-based model likes. It has averaged an 18.3-per-cent return on retained earnings (those not paid out as dividends) over the past decade, which Buffett model likes. It has good momentum (93 relative strength over past 12 months) and a strong 27.6-per-cent return on equity over the past decade, which the Buffett model also likes.
John Reese is long CACC.
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