Financial Survey: Credit Acceptance (NASDAQ:CACC) vs. Upstart (NASDAQ:UPST)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Upstart	4.84%	7.13%	1.82%
Credit Acceptance	21.54%	31.67%	5.68%

Analyst Recommendations

This is a summary of current ratings and target prices for Upstart and Credit Acceptance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Upstart	2	6	8	0	2.38
Credit Acceptance	0	3	1	0	2.25

Upstart currently has a consensus target price of $44.40, suggesting a potential upside of 57.32%. Credit Acceptance has a consensus target price of $570.00, suggesting a potential downside of 6.19%. Given Upstart’s stronger consensus rating and higher possible upside, equities analysts clearly believe Upstart is more favorable than Credit Acceptance.

Institutional & Insider Ownership

63.0% of Upstart shares are held by institutional investors. Comparatively, 81.7% of Credit Acceptance shares are held by institutional investors. 17.3% of Upstart shares are held by insiders. Comparatively, 6.1% of Credit Acceptance shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Volatility and Risk

Upstart has a beta of 2.16, suggesting that its share price is 116% more volatile than the S&P 500. Comparatively, Credit Acceptance has a beta of 1.35, suggesting that its share price is 35% more volatile than the S&P 500.

Valuation and Earnings

This table compares Upstart and Credit Acceptance”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Upstart	$1.04 billion	2.63	$53.60 million	$0.49	57.60
Credit Acceptance	$2.32 billion	2.74	$423.90 million	$45.48	13.36

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

Summary

Credit Acceptance beats Upstart on 8 of the 14 factors compared between the two stocks.

About Upstart

Upstart Holdings, Inc., together with its subsidiaries, operates a cloud-based artificial intelligence (AI) lending platform in the United States. Its platform includes personal loans, automotive retail and refinance loans, home equity lines of credit, and small dollar loans that connects consumer demand for loans to its to bank and credit unions. Upstart Holdings, Inc. was founded in 2012 and is headquartered in San Mateo, California.

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.