Head to Head Analysis: FirstCash (NASDAQ:FCFS) versus Credit Acceptance (NASDAQ:CACC)

Credit Acceptance (NASDAQ:CACC) and FirstCash (NASDAQ:FCFS) are both mid-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, analyst recommendations, valuation, risk and institutional ownership.

Institutional & Insider Ownership

81.7% of Credit Acceptance shares are owned by institutional investors. Comparatively, 80.3% of FirstCash shares are owned by institutional investors. 6.1% of Credit Acceptance shares are owned by company insiders. Comparatively, 2.9% of FirstCash shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Credit Acceptance and FirstCash’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Credit Acceptance	21.54%	31.67%	5.68%
FirstCash	9.42%	19.65%	8.38%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Credit Acceptance and FirstCash, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credit Acceptance	0	3	1	0	2.25
FirstCash	0	2	3	1	2.83

Credit Acceptance currently has a consensus target price of $570.00, indicating a potential downside of 2.66%. FirstCash has a consensus target price of $212.33, indicating a potential upside of 4.84%. Given FirstCash’s stronger consensus rating and higher possible upside, analysts plainly believe FirstCash is more favorable than Credit Acceptance.

Risk and Volatility

Credit Acceptance has a beta of 1.37, suggesting that its share price is 37% more volatile than the S&P 500. Comparatively, FirstCash has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500.

Earnings & Valuation

This table compares Credit Acceptance and FirstCash”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Credit Acceptance	$2.32 billion	2.64	$423.90 million	$45.48	12.88
FirstCash	$3.66 billion	2.40	$330.38 million	$8.76	23.12

Credit Acceptance has higher earnings, but lower revenue than FirstCash. Credit Acceptance is trading at a lower price-to-earnings ratio than FirstCash, indicating that it is currently the more affordable of the two stocks.

Summary

Credit Acceptance beats FirstCash on 8 of the 15 factors compared between the two stocks.

About Credit Acceptance

Credit Acceptance Corporation engages in the provision of financing programs, and related products and services in the United States. The company advances money to automobile dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps the amount collected from the consumers. It is also involved in the business of reinsuring coverage under vehicle service contracts sold to consumers by dealers on vehicles financed by the company. The company serves independent and franchised automobile dealers. Credit Acceptance Corporation was incorporated in 1972 and is headquartered in Southfield, Michigan.

About FirstCash

FirstCash Holdings, Inc, together with its subsidiaries, operates retail pawn stores in the United States, Mexico, and rest of Latin America. The company operates in three segments: U.S. Pawn, Latin America Pawn, and Retail POS Payment Solutions segments. Its pawn stores lend money on the collateral of pledged personal property, including jewelry, electronics, tools, appliances, sporting goods, and musical instruments; and retails merchandise acquired through collateral forfeitures on forfeited pawn loans and over-the-counter purchases of merchandise directly from customers. The company also provides retail POS payment solutions, which focuses on LTO products and facilitating other retail financing payment options across the network of traditional and e-commerce merchant partners. It serves cash and credit-constrained consumers. The company was formerly known as FirstCash, Inc and changed its name to FirstCash Holdings, Inc. in December 2021. FirstCash Holdings, Inc was incorporated in 1988 and is headquartered in Fort Worth, Texas.