Head-To-Head Comparison: Credit Acceptance (NASDAQ:CACC) versus Aaron’s (NYSE:PRG)

Aaron’s (NYSE:PRG) and Credit Acceptance (NASDAQ:CACC) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, dividends, analyst recommendations and earnings.

Valuation & Earnings

This table compares Aaron’s and Credit Acceptance”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Aaron’s	$2.46 billion	0.50	$197.25 million	$5.06	6.20
Credit Acceptance	$2.16 billion	2.55	$247.90 million	$34.69	14.16

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Aaron’s	8.53%	22.54%	9.98%
Credit Acceptance	18.69%	27.06%	5.08%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Aaron’s and Credit Acceptance, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Aaron’s	1	2	4	1	2.63
Credit Acceptance	1	2	0	0	1.67

Aaron’s currently has a consensus price target of $41.50, suggesting a potential upside of 32.31%. Credit Acceptance has a consensus price target of $440.00, suggesting a potential downside of 10.45%. Given Aaron’s’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Aaron’s is more favorable than Credit Acceptance.

Institutional & Insider Ownership

97.9% of Aaron’s shares are held by institutional investors. Comparatively, 81.7% of Credit Acceptance shares are held by institutional investors. 3.2% of Aaron’s shares are held by company insiders. Comparatively, 6.6% of Credit Acceptance shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Risk and Volatility

Aaron’s has a beta of 1.79, suggesting that its stock price is 79% more volatile than the S&P 500. Comparatively, Credit Acceptance has a beta of 1.19, suggesting that its stock price is 19% more volatile than the S&P 500.

Summary

Aaron’s beats Credit Acceptance on 8 of the 15 factors compared between the two stocks.

About Aaron’s

PROG Holdings, Inc. (NYSE:PRG) is a financial technology holding company based in Salt Lake City, Utah with three business segments: Progressive Leasing, which offers lease-to-own transactions primarily to credit-challenged consumers through e-commerce and point-of-sale retail partners, via online, mobile, and in-store solutions; Vive Financial, which provides consumers who may not qualify for traditional prime lending with a variety of second-look, revolving credit products through private label and branded credit cards; and Four Technologies, which provides consumers of all credit backgrounds Buy Now, Pay Later (BNPL) options through four interest-free installments via its platform, Four.

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.