PRA Group, Inc. (PRAA Quick QuotePRAA - Free Report) reported second-quarter 2024 earnings per share of 54 cents, which significantly outpaced the Zacks Consensus Estimate of 5 cents. A loss of 10 cents per share was incurred in the prior-year quarter.

Total revenues climbed 35.8% year over year to $284.2 million. The top line surpassed the consensus mark by 16%.

The quarterly results were aided by improved cash collections, higher portfolio income and solid purchasing activity. However, the upside was partly offset by an elevated expense level.

Quarterly Operational Update

PRA Group’s cash collections were $473.9 million, which advanced 13% year over year and outpaced the Zacks Consensus Estimate of $469.2 million. The metric benefited on the back of improved cash collections across the United States and Europe.

Portfolio income rose 13.6% year over year to $209.3 million and beat the consensus mark of $205.8 million. Other revenues of $1.6 million plunged 57.5% year over year and fell short of the Zacks Consensus Estimate of $3.4 million. 

Total operating expenses escalated 19.1% year over year to $195 million due to increased compensation and employee services, legal collection costs and fees, agency fees and other operating expenses.

PRAA’s net income of $25.1 million increased nearly 22-fold year over year. 

The company purchased nonperforming loan portfolios of $379.4 million, up 15.7% year over year. The cash efficiency ratio was 58.9%. The estimated remaining collections (“ERC”) amounted to $6.8 billion at the second-quarter end.

Financial Update (as of Jun 30, 2024)

PRA Group exited the second quarter with cash and cash equivalents of $118.9 million, which grew 5.6% from the 2023-end level. It had $1.4 billion remaining under its credit facilities at the second-quarter end.

Total assets of $4.7 billion increased 3% from the figure at 2023 end.

Borrowings were $3.1 billion, up 6.8% from the figure as of Dec 31, 2023.

Total equity of $1.2 billion tumbled 2.9% from the 2023-end level.

Guidance

For 2024, the company still expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRAA continues to forecast cash collections to witness double-digit growth. Management expects legal collection spending to moderate in the second half of 2024. 

The effective tax rate is expected to be in the low to mid 20% range this year. The cash efficiency ratio is projected at around 60% for 2024 while the earlier view anticipated the metric to register more than 60%. It continues to expect a return on average tangible equity within 6-8%. PRA Group is likely to collect an ERC balance of $1.6 billion within the next 12 months.

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.

Performance of Other Finance Sector Players

Here are some other Finance sector players that have reported second-quarter results so far. The bottom-line results of Morgan Stanley (MS Quick QuoteMS - Free Report) , The Goldman Sachs Group, Inc. (GS Quick QuoteGS - Free Report) and Synchrony Financial (SYF Quick QuoteSYF - Free Report) beat the respective Zacks Consensus Estimate.

Morgan Stanley’s second-quarter 2024 earnings of $1.82 per share handily outpaced the Zacks Consensus Estimate of $1.65. The bottom line also compared favorably with earnings of $1.24 per share reported in the prior-year quarter. MS’ investment banking (“IB”) business rebounded. Advisory fees surged 30% year over year. Further, underwriting fees witnessed solid momentum. Specifically, equity underwriting income jumped 56% and fixed income underwriting income was up 71%. 

Total IB fees (in the Institutional Securities division) grew 51% to $1.62 billion. However, despite a 24% increase in interest income, the company’s net interest income (“NII”) witnessed modest growth due to higher interest expenses. Net income applicable to common shareholders (GAAP) was $2.94 billion, up 44% from the year-ago quarter. Quarterly net revenues were $15.02 billion, up 12% from the prior-year quarter. The top line beat the Zacks Consensus Estimate of $14.18 billion. NII was $2.07 billion, up 3%. 

Goldman Sachs reported second-quarter earnings per share of $8.62, which surpassed the Zacks Consensus Estimate of $8.52. This compares favorably with earnings of $3.08 per share reported in the year-earlier quarter. Net earnings of $3.04 billion increased significantly from $1.22 billion in the prior-year quarter. Net revenues of $12.73 billion increased 16.9% from the year-ago quarter. Also, the top line surpassed the Zacks Consensus Estimate of $12.6 billion.

Provision for credit losses was $282 million, down 54.1% year over year. The Asset & Wealth Management division generated revenues of $3.88 billion, up 27.3% year over year. Firmwide assets under supervision were a record $2.93 trillion, up 8.1% from the prior-year quarter. The Global Banking & Markets division recorded revenues of $8.18 billion, which increased 13.8% year over year. Adjusted operating income grew 8% to $309.2 million.

Synchrony Financial’s second-quarter adjusted earnings per share of $1.55 comfortably beat the Zacks Consensus Estimate of $1.35. The bottom line also increased from earnings of $1.32 per share a year ago. NII improved 6.9% year over year to $4.4 billion. However, it missed the consensus mark by 0.8%. Retailer share arrangements of Synchrony fell 8.7% year over year to $810 million. Total loan receivables of SYF grew 7.9% year over year to $102.3 billion. 

Total deposits were $83.1 billion, which rose 9.7% year over year. Provision for credit losses increased 22.3% year over year to $1.7 billion due to increased net charge-offs. The purchase volume of Synchrony declined 0.9% year over year to $46.8 billion. Interest and fees on loans of $5.3 billion improved 10.2% year over year. Net interest margin deteriorated 48 bps to 14.5%.