American Express (NYSE:AXP) vs. Credit Acceptance (NASDAQ:CACC) Financial Contrast

Credit Acceptance (NASDAQ:CACC) and American Express (NYSE:AXP) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, analyst recommendations, valuation and dividends.

Valuation & Earnings

This table compares Credit Acceptance and American Express”s 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	2.63	$423.90 million	$45.48	12.82
American Express	$72.23 billion	3.18	$10.83 billion	$16.48	20.62

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

Analyst Recommendations

This is a summary of current ratings for Credit Acceptance and American Express, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Credit Acceptance	0	3	1	0	2.25
American Express	1	10	12	1	2.54

Credit Acceptance presently has a consensus price target of $570.00, indicating a potential downside of 2.24%. American Express has a consensus price target of $373.32, indicating a potential upside of 9.83%. Given American Express’ stronger consensus rating and higher possible upside, analysts clearly believe American Express is more favorable than Credit Acceptance.

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, American Express has a beta of 1.04, meaning that its stock price is 4% more volatile than the S&P 500.

Profitability

This table compares Credit Acceptance and American Express’ 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%
American Express	15.07%	34.12%	3.77%

Institutional and Insider Ownership

81.7% of Credit Acceptance shares are held by institutional investors. Comparatively, 84.3% of American Express shares are held by institutional investors. 6.1% of Credit Acceptance shares are held by company insiders. Comparatively, 0.1% of American Express shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

American Express beats Credit Acceptance on 10 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 American Express

American Express Company, together with its subsidiaries, operates as integrated payments company in the United States, Europe, the Middle East and Africa, the Asia Pacific, Australia, New Zealand, Latin America, Canada, the Caribbean, and Internationally. It operates through four segments: U.S. Consumer Services, Commercial Services, International Card Services, and Global Merchant and Network Services. The company’s products and services include credit card, charge card, banking, and other payment and financing products; network services; expense management products and services; and travel and lifestyle services. It also provides merchant acquisition and processing, servicing and settlement, point-of-sale marketing, and information products and services for merchants; and fraud prevention services, as well as the design and operation of customer loyalty programs. In addition, the company operates lounges at airports under Centurion Lounge brand name. It sells its products and services to consumers, small businesses, mid-sized companies, and large corporations through mobile and online applications, affiliate marketing, customer referral programs, third-party service providers and business partners, direct mail, telephone, in-house sales teams, and direct response advertising. American Express Company was founded in 1850 and is headquartered in New York, New York.