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PRA Group (PRAA) Down 18.7% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for PRA Group (PRAA - Free Report) . Shares have lost about 18.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
PRA Group Q1 Earnings Beat Estimates, Revenue Up Y/Y
PRA Group reported a first-quarter 2024 earnings per share of 9 cents, which outpaced the Zacks Consensus Estimate by a whopping 160%. An adjusted operating loss of $1.5 per share was incurred in the prior-year quarter.
Total revenues of $256 million rose 65.2% year over year in the quarter under review. The top line outpaced the consensus mark by 12.5%.
The first-quarter results benefited from robust portfolio income, growing cash collection, improving pricing and better operational results in Brazil, Europe and the United States. However, the upside was partially offset by increased legal collection fees and expenses.
Quarterly Operational Update
Total cash collections of PRA Group grew 9% year over year to $449.5 million, which beat the Zacks Consensus Estimate by 1.8%. The metric benefited on the back of higher cash collections from Brazil, Europe, and the United States.
The portfolio income of $202.1 million advanced 7.3% year over year in the first quarter but marginally missed the consensus mark. Other revenues declined 55.2% year over year to $1.9 million, missing the consensus mark by 58.7%.
Total operating expenses of $189.2 million increased by a small margin year over year due to legal collection costs and fees, agency fees, and communication expenses.
PRA Group reported a net income of $11.8 million in the quarter under review against the prior-year quarter’s net loss of $53.9 million.
The company purchased nonperforming loan portfolios of $245.8 million in the first quarter, which increased 6.8% year over year.The cash efficiency ratio was at 58%. The estimated remaining collections (“ERC”) of PRA Group amounted to $6.5 billion at the first-quarter end.
Financial Update (As of Mar 31, 2024)
PRA Group exited the first quarter with cash and cash equivalents of $108.1 million, which declined from $112.5 million at 2023-end. It had $1.2 billion remaining under its credit facilities at the first-quarter end. Total assets of $4.48 billion decreased from the 2023-end figure of $4.53 billion.
Borrowings were $3 billion, up from the $2.9 billion figure as of Mar 31, 2023. Total equity of $1.2 billion slipped from the 2023-end level of $1.24 billion.
Guidance Reiterated
For 2024, it expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRA Group expects cash collections in 2024 to witness double-digit growth. Its shift to lower-cost locations and expense management is likely to result in modest growth in expenses.
The effective tax rate is expected in the low 20% range this year. The cash efficiency ratio is projected at more than 60% for 2024. It also expects a return on average tangible equity within 6-8% for the year. PRA Group is likely to collect an ERC balance of $1.5 billion within the next 12 months.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 1700% due to these changes.
VGM Scores
Currently, PRA Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, PRA Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
PRA Group is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Moody's (MCO - Free Report) , a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended March 2024 more than a month ago.
Moody's reported revenues of $1.79 billion in the last reported quarter, representing a year-over-year change of +21.5%. EPS of $3.37 for the same period compares with $2.99 a year ago.
For the current quarter, Moody's is expected to post earnings of $2.70 per share, indicating a change of +17.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.4% over the last 30 days.
Moody's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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PRA Group (PRAA) Down 18.7% 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 18.7% 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 its most recent earnings report in order to get a better handle on the important catalysts.
PRA Group Q1 Earnings Beat Estimates, Revenue Up Y/Y
PRA Group reported a first-quarter 2024 earnings per share of 9 cents, which outpaced the Zacks Consensus Estimate by a whopping 160%. An adjusted operating loss of $1.5 per share was incurred in the prior-year quarter.
Total revenues of $256 million rose 65.2% year over year in the quarter under review. The top line outpaced the consensus mark by 12.5%.
The first-quarter results benefited from robust portfolio income, growing cash collection, improving pricing and better operational results in Brazil, Europe and the United States. However, the upside was partially offset by increased legal collection fees and expenses.
Quarterly Operational Update
Total cash collections of PRA Group grew 9% year over year to $449.5 million, which beat the Zacks Consensus Estimate by 1.8%. The metric benefited on the back of higher cash collections from Brazil, Europe, and the United States.
The portfolio income of $202.1 million advanced 7.3% year over year in the first quarter but marginally missed the consensus mark. Other revenues declined 55.2% year over year to $1.9 million, missing the consensus mark by 58.7%.
Total operating expenses of $189.2 million increased by a small margin year over year due to legal collection costs and fees, agency fees, and communication expenses.
PRA Group reported a net income of $11.8 million in the quarter under review against the prior-year quarter’s net loss of $53.9 million.
The company purchased nonperforming loan portfolios of $245.8 million in the first quarter, which increased 6.8% year over year.The cash efficiency ratio was at 58%. The estimated remaining collections (“ERC”) of PRA Group amounted to $6.5 billion at the first-quarter end.
Financial Update (As of Mar 31, 2024)
PRA Group exited the first quarter with cash and cash equivalents of $108.1 million, which declined from $112.5 million at 2023-end. It had $1.2 billion remaining under its credit facilities at the first-quarter end. Total assets of $4.48 billion decreased from the 2023-end figure of $4.53 billion.
Borrowings were $3 billion, up from the $2.9 billion figure as of Mar 31, 2023. Total equity of $1.2 billion slipped from the 2023-end level of $1.24 billion.
Guidance Reiterated
For 2024, it expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRA Group expects cash collections in 2024 to witness double-digit growth. Its shift to lower-cost locations and expense management is likely to result in modest growth in expenses.
The effective tax rate is expected in the low 20% range this year. The cash efficiency ratio is projected at more than 60% for 2024. It also expects a return on average tangible equity within 6-8% for the year. PRA Group is likely to collect an ERC balance of $1.5 billion within the next 12 months.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 1700% due to these changes.
VGM Scores
Currently, PRA Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, PRA Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
PRA Group is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Moody's (MCO - Free Report) , a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended March 2024 more than a month ago.
Moody's reported revenues of $1.79 billion in the last reported quarter, representing a year-over-year change of +21.5%. EPS of $3.37 for the same period compares with $2.99 a year ago.
For the current quarter, Moody's is expected to post earnings of $2.70 per share, indicating a change of +17.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -1.4% over the last 30 days.
Moody's has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.