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PRA Group (PRAA) Rises 8% Since Q3 Earnings Beat on Low Costs
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Shares of PRA Group, Inc. (PRAA - Free Report) have grown 7.6% since reporting third-quarter 2022 results on Nov 3. The quarterly results benefited from strong European operations and lower operating expenses. Yet, the positives were partly offset by declining portfolio income and weak cash collections from its four sources, namely Americas and Australia Core, Americas Insolvency, Europe Core and Europe Insolvency.
PRA Group reported third-quarter 2022 earnings per share of 63 cents, outpacing the Zacks Consensus Estimate by 37%. However, the bottom line dropped 17.1% year over year.
Total revenues fell 7.2% year over year to $244.8 million in the quarter under review. Yet, the top line beat the consensus mark by 7.6%.
PRAA’s cash collection amounted to $412.3 million, down 15.6% year over year due to a decline in portfolio purchases inducing lower U.S. call center and other collections. However, the figure fell short of the Zacks Consensus Estimate of $423 million.
Fee income slid 1.4% year over year to $6.12 million in the third quarter, higher than the consensus mark of $6.1 million. The portfolio income of PRA Group came in at $185.9 million, tumbling 12.7% year over year and missing the Zacks Consensus Estimate of $187 million.
Total operating expenses of $174 million decreased 6.5% year over year, thanks to a 16.4% and 5.6% decline in outside fees and services, and compensation and employee services, respectively.
PRAA purchased nonperforming loan portfolios of $183.1 million. Cash efficiency ratio of 58.4% declined 400 basis points year over year. Estimated remaining collections were $5,320.2 million at the third-quarter end.
Financial Update (as of Sep 30, 2022)
PRA Group exited the third quarter with cash and cash equivalents of $58 million, which plunged 33.8% from the 2021-end level. PRAA had $1.7 billion remaining under its credit facilities at the third-quarter end.
Total assets worth $3,895.3 million decreased 10.8% from the figure at 2021 end.
Borrowings of $2,379.6 million fell 8.8% from the figure as of Dec 31, 2021. Total equity of $1,182.6 dropped 10.7% from the 2021-end level.
During the first nine months ended Sep 30, 2022, net cash used in operating activities amounted to $3.4 million, while in the prior-year comparable period, PRA Group generated operating cash flows of $38.3 million.
Share Repurchase Update
PRAA bought back shares worth $25 million in the quarter under review. There was an available repurchase capacity of $68 million as of Sep 30, 2022.
Outlook
For 2022, management anticipates the effective tax rate in the low 20% range. Cash efficiency is estimated to witness an uptick in the days ahead.
Of the Finance sector players that have reported third-quarter results so far, the bottom-line results of Bank of New York Mellon Corporation (BK - Free Report) , U.S. Bancorp (USB - Free Report) and Nasdaq, Inc. (NDAQ - Free Report) beat the respective Zacks Consensus Estimate.
BNY Mellon’s third-quarter 2022 adjusted earnings of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10. The bottom line rose 11% from the prior-year quarter’s number. Total revenues grew 6% year over year to $4.28 billion. The top line outpaced the Zacks Consensus Estimate of $4.18 billion. BK’s net interest revenues, on a fully taxable-equivalent (FTE) basis, were $929 million, up 44.3% year over year.
U.S. Bancorp reported third-quarter 2022 earnings per share (excluding merger and integration-related charges) of $1.18, beating the Zacks Consensus Estimate of 1.17. In the prior-year quarter, USB reported earnings of $1.30 per share. Total net revenues were $6.30 billion, up 7.4% year over year. The top line beat the Zacks Consensus Estimate of $6.28 billion. Average earning assets of USB climbed 7.6% year over year.
Nasdaq reported third-quarter 2022 adjusted earnings per share of 68 cents, beating the Zacks Consensus Estimate of 65 cents by 4.6%. The bottom line improved 15% year over year. Revenues of $890 million increased 6% year over year. The top line missed the Zacks Consensus Estimate by 0.1%. NDAQ’s annualized Recurring Revenue (ARR) increased 8% year over year. Annualized SaaS revenues increased 13%, representing 35% of ARR.
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PRA Group (PRAA) Rises 8% Since Q3 Earnings Beat on Low Costs
Shares of PRA Group, Inc. (PRAA - Free Report) have grown 7.6% since reporting third-quarter 2022 results on Nov 3. The quarterly results benefited from strong European operations and lower operating expenses. Yet, the positives were partly offset by declining portfolio income and weak cash collections from its four sources, namely Americas and Australia Core, Americas Insolvency, Europe Core and Europe Insolvency.
PRA Group reported third-quarter 2022 earnings per share of 63 cents, outpacing the Zacks Consensus Estimate by 37%. However, the bottom line dropped 17.1% year over year.
Total revenues fell 7.2% year over year to $244.8 million in the quarter under review. Yet, the top line beat the consensus mark by 7.6%.
PRA Group, Inc. Price, Consensus and EPS Surprise
PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote
Quarterly Operational Update
PRAA’s cash collection amounted to $412.3 million, down 15.6% year over year due to a decline in portfolio purchases inducing lower U.S. call center and other collections. However, the figure fell short of the Zacks Consensus Estimate of $423 million.
Fee income slid 1.4% year over year to $6.12 million in the third quarter, higher than the consensus mark of $6.1 million. The portfolio income of PRA Group came in at $185.9 million, tumbling 12.7% year over year and missing the Zacks Consensus Estimate of $187 million.
Total operating expenses of $174 million decreased 6.5% year over year, thanks to a 16.4% and 5.6% decline in outside fees and services, and compensation and employee services, respectively.
PRAA purchased nonperforming loan portfolios of $183.1 million. Cash efficiency ratio of 58.4% declined 400 basis points year over year. Estimated remaining collections were $5,320.2 million at the third-quarter end.
Financial Update (as of Sep 30, 2022)
PRA Group exited the third quarter with cash and cash equivalents of $58 million, which plunged 33.8% from the 2021-end level. PRAA had $1.7 billion remaining under its credit facilities at the third-quarter end.
Total assets worth $3,895.3 million decreased 10.8% from the figure at 2021 end.
Borrowings of $2,379.6 million fell 8.8% from the figure as of Dec 31, 2021. Total equity of $1,182.6 dropped 10.7% from the 2021-end level.
During the first nine months ended Sep 30, 2022, net cash used in operating activities amounted to $3.4 million, while in the prior-year comparable period, PRA Group generated operating cash flows of $38.3 million.
Share Repurchase Update
PRAA bought back shares worth $25 million in the quarter under review. There was an available repurchase capacity of $68 million as of Sep 30, 2022.
Outlook
For 2022, management anticipates the effective tax rate in the low 20% range. Cash efficiency is estimated to witness an uptick in the days ahead.
Zacks Rank
PRA Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Finance Sector Releases
Of the Finance sector players that have reported third-quarter results so far, the bottom-line results of Bank of New York Mellon Corporation (BK - Free Report) , U.S. Bancorp (USB - Free Report) and Nasdaq, Inc. (NDAQ - Free Report) beat the respective Zacks Consensus Estimate.
BNY Mellon’s third-quarter 2022 adjusted earnings of $1.21 per share surpassed the Zacks Consensus Estimate of $1.10. The bottom line rose 11% from the prior-year quarter’s number. Total revenues grew 6% year over year to $4.28 billion. The top line outpaced the Zacks Consensus Estimate of $4.18 billion. BK’s net interest revenues, on a fully taxable-equivalent (FTE) basis, were $929 million, up 44.3% year over year.
U.S. Bancorp reported third-quarter 2022 earnings per share (excluding merger and integration-related charges) of $1.18, beating the Zacks Consensus Estimate of 1.17. In the prior-year quarter, USB reported earnings of $1.30 per share. Total net revenues were $6.30 billion, up 7.4% year over year. The top line beat the Zacks Consensus Estimate of $6.28 billion. Average earning assets of USB climbed 7.6% year over year.
Nasdaq reported third-quarter 2022 adjusted earnings per share of 68 cents, beating the Zacks Consensus Estimate of 65 cents by 4.6%. The bottom line improved 15% year over year. Revenues of $890 million increased 6% year over year. The top line missed the Zacks Consensus Estimate by 0.1%. NDAQ’s annualized Recurring Revenue (ARR) increased 8% year over year. Annualized SaaS revenues increased 13%, representing 35% of ARR.