Analyzing Upstart (NASDAQ:UPST) and Credit Acceptance (NASDAQ:CACC)

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

Profitability

This table compares Credit Acceptance and Upstart’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%
Upstart	4.84%	7.13%	1.82%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Credit Acceptance	$2.32 billion	2.68	$423.90 million	$45.48	13.05
Upstart	$1.04 billion	2.84	$53.60 million	$0.49	62.18

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.

Risk & Volatility

Credit Acceptance has a beta of 1.37, meaning that its stock price is 37% more volatile than the S&P 500. Comparatively, Upstart has a beta of 2.29, meaning that its stock price is 129% more volatile than the S&P 500.

Institutional and Insider Ownership

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Credit Acceptance and Upstart, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credit Acceptance	0	3	1	0	2.25
Upstart	1	7	8	0	2.44

Credit Acceptance presently has a consensus target price of $570.00, suggesting a potential downside of 3.98%. Upstart has a consensus target price of $44.40, suggesting a potential upside of 45.72%. Given Upstart’s stronger consensus rating and higher possible upside, analysts clearly believe Upstart is more favorable than Credit Acceptance.

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 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.