Credit Acceptance Corporation (NASDAQ:CACC) shareholders might be concerned after seeing the share price drop 10% in the last quarter. On the other hand the share price is higher than it was three years ago. In that time, it is up 13%, which isn't bad, but not amazing either.

Since the long term performance has been good but there's been a recent pullback of 4.7%, let's check if the fundamentals match the share price.

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over the last three years, Credit Acceptance failed to grow earnings per share, which fell 20% (annualized).

Earnings per share have melted like a stack of ice cubes, in stark contrast to the share price. Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

You can only imagine how long term shareholders feel about the declining revenue trend (slipping at 22% per year). The only thing that's clear is there is low correlation between Credit Acceptance's share price and its historic fundamental data. Further research may be required!

The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).

It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. So we recommend checking out this free report showing consensus forecasts

A Different Perspective

Credit Acceptance shareholders gained a total return of 11% during the year. Unfortunately this falls short of the market return. The silver lining is that the gain was actually better than the average annual return of 0.9% per year over five year. It is possible that returns will improve along with the business fundamentals. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Even so, be aware that Credit Acceptance is showing 1 warning sign in our investment analysis , you should know about...

We will like Credit Acceptance better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.