We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
PRA Group (PRAA) Down 6.5% Since Last Earnings Report: Can It Rebound?
Read MoreHide Full Article
A month has gone by since the last earnings report for PRA Group (PRAA - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PRA Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PRA Group Beats Q2 Earnings Estimates
PRA Group reported second-quarter 2022 earnings per share of 91 cents, beating the Zacks Consensus Estimate of 53 cents. However, the bottom line decreased from $1.22 per share a year ago.
Total revenues of $258.3 million were down from the year-ago quarter’s $285.6 million. However, the top line beat the Zacks Consensus Estimate of $233 million.
It reported better-than-expected results, supported by decreased operating expenses and higher fee income. The positives were partially offset by reduced cash collections in the Americas and Australia Core, coupled with reduced portfolio income.
Quarterly Operational Update
PRAA’s cash collection of $444.1 million decreased from the year-ago figure of $543.8 million due to a decrease in the Americas and Australia Core, Americas Insolvency, Europe Core and Europe Insolvency collections. U.S. call center and other collections declined 32.5% year over year in the second quarter. Similar traits were witnessed in the U.S. legal collections.
PRA Group’s fee income of $6.5 million increased from $2.5 million a year ago. Its portfolio income came in at $194 million during the quarter under review, down from $219.1 million in the prior-year quarter.
Total operating expenses were down to $174.5 million from $181.4 million a year ago on lower compensation and employee services, legal collection costs and fees, outside fees, communication and other operating costs.
PRA Group purchased $231.3 million of nonperforming loan portfolios in the quarter under review. Its cash efficiency ratio declined to 61.3% in the second quarter, down from 66.8% in the year-ago period. Estimated remaining collections in the second quarter were $5.6 billion, the majority of which were in the United States.
Share Repurchase Update
PRAA bought back shares worth $34.9 million in the second quarter of 2022. Last February, management authorized a new $150-million program upon completion of the previous program. At the second quarter-end, PRA Group had $92.7 million under its share buyback authorization.
Financial Update (as of Jun 30, 2022)
PRAA had total assets worth $4,088.8 million at the second quarter-end, down from the $4,366.2 million level at the 2021 end. Cash and cash equivalents in the quarter under discussion were $68 million, down from $87.6 million at the 2021 end.
At the end of the June quarter, borrowings decreased to $2,481.6 million from $2,608.7 million in 2021 end. PRA Group exited the second quarter with total equity of $1,242.4 million, down from $1,324.8 million as of Dec 31, 2021.
Net cash used in operating activities amounted to $41.8 million in the first half of 2022 compared with the operating cash flow of $21.6 million a year ago.
Forward View
PRA Group has plans to keep boosting its products and market share. It expects the sales volume to increase by 2022 end. PRAA plans to continue its growth in Australia. Also, the company expects the credit card charge-off rates to increase in the coming days, as the current level is unsustainable.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -17.2% due to these changes.
VGM Scores
At this time, PRA Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PRA Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
PRA Group (PRAA) Down 6.5% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for PRA Group (PRAA - Free Report) . Shares have lost about 6.5% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is PRA Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
PRA Group Beats Q2 Earnings Estimates
PRA Group reported second-quarter 2022 earnings per share of 91 cents, beating the Zacks Consensus Estimate of 53 cents. However, the bottom line decreased from $1.22 per share a year ago.
Total revenues of $258.3 million were down from the year-ago quarter’s $285.6 million. However, the top line beat the Zacks Consensus Estimate of $233 million.
It reported better-than-expected results, supported by decreased operating expenses and higher fee income. The positives were partially offset by reduced cash collections in the Americas and Australia Core, coupled with reduced portfolio income.
Quarterly Operational Update
PRAA’s cash collection of $444.1 million decreased from the year-ago figure of $543.8 million due to a decrease in the Americas and Australia Core, Americas Insolvency, Europe Core and Europe Insolvency collections. U.S. call center and other collections declined 32.5% year over year in the second quarter. Similar traits were witnessed in the U.S. legal collections.
PRA Group’s fee income of $6.5 million increased from $2.5 million a year ago. Its portfolio income came in at $194 million during the quarter under review, down from $219.1 million in the prior-year quarter.
Total operating expenses were down to $174.5 million from $181.4 million a year ago on lower compensation and employee services, legal collection costs and fees, outside fees, communication and other operating costs.
PRA Group purchased $231.3 million of nonperforming loan portfolios in the quarter under review. Its cash efficiency ratio declined to 61.3% in the second quarter, down from 66.8% in the year-ago period. Estimated remaining collections in the second quarter were $5.6 billion, the majority of which were in the United States.
Share Repurchase Update
PRAA bought back shares worth $34.9 million in the second quarter of 2022. Last February, management authorized a new $150-million program upon completion of the previous program. At the second quarter-end, PRA Group had $92.7 million under its share buyback authorization.
Financial Update (as of Jun 30, 2022)
PRAA had total assets worth $4,088.8 million at the second quarter-end, down from the $4,366.2 million level at the 2021 end. Cash and cash equivalents in the quarter under discussion were $68 million, down from $87.6 million at the 2021 end.
At the end of the June quarter, borrowings decreased to $2,481.6 million from $2,608.7 million in 2021 end. PRA Group exited the second quarter with total equity of $1,242.4 million, down from $1,324.8 million as of Dec 31, 2021.
Net cash used in operating activities amounted to $41.8 million in the first half of 2022 compared with the operating cash flow of $21.6 million a year ago.
Forward View
PRA Group has plans to keep boosting its products and market share. It expects the sales volume to increase by 2022 end. PRAA plans to continue its growth in Australia. Also, the company expects the credit card charge-off rates to increase in the coming days, as the current level is unsustainable.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -17.2% due to these changes.
VGM Scores
At this time, PRA Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, PRA Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.