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Encore Capital (ECPG) Shares Rise 11.4% Since Q2 Earnings Beat
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Encore Capital Group, Inc. (ECPG - Free Report) shares have gained 11.4% since it reported second-quarter 2024 results on Aug 7, 2024. The strong second-quarter results benefited from improving portfolio supply in the United States and rising collections. However, growth in expenses partially offset the upside.
ECPG reported second-quarter 2024 adjusted earnings per share (EPS) of $1.34, which beat the Zacks Consensus Estimate by 6.4%. The bottom line also reported an improvement of 24% year over year.
ECPG's revenues climbed 10% year over year to $355.3 million. Also, the top line beat the consensus mark by 3.2%.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Total debt purchasing revenues improved 10.1% year over year in the quarter under review to $327.7 million. Servicing revenues marginally grew in the second quarter of 2024 to $21.1 million but missed the consensus mark by 4.1%.
Global collections grew 15% year over year to $547 million and beat the consensus mark by 7.4% thanks to strong portfolio purchasing in the United States in the past couple of years and a stable collections environment in its key markets.
Total operating expenses of $253.4 million rose 7.9% year over year due to increased salaries and employee benefits, cost of legal collections and other operating expenses. Cash efficiency margin (cash receipts minus operating expenses minus impairment charges divided by cash receipts) increased to 53% in the second quarter from 51.2% a year ago.
Interest expenses increased 22.8% year over year to $61.4 million in the quarter under review. Encore Capital’s net income of $32.2 million improved 22% year over year.
Global portfolio purchases of $279 million rose from $274 million a year ago. It deployed $237 million in the U.S. andthe rest in Europe.
Financial Position (as of Jun 30, 2024)
Encore Capital exited the second quarter with total assets of $4.8 billion, higher than $4.6 billion at 2023-end. Cash and cash equivalents amounted to $250.6 million in the second quarter, higher than $158.4 million at 2023-end.
Borrowings increased from $3.32 billion at 2023-end to $3.46 billion. Total liabilities of $3.83 billion at the second-quarter end were higher than $3.69 billion at 2023 end. Total equity increased from $936.5 million at 2023-end to $988.1 million.
Net cash provided by operating activities increased 38.4% year over year in the first half of 2024 to $86.7 million.
2024 Guidance
Management expects portfolio purchasing to surpass the 2023 figure of $1.1 billion in 2024 and reach $1.15 billion. It expects collections to grow by around 11% to $2.075 billion in 2024.
Interest expenses are expected to be $250 million for 2024 due to bond refinancing.
Estimate Revisions
The company has witnessed four and two downward estimate revisions for the third quarter and full-year 2024 during the past 30 days against no upward movement. During this time, the Zacks Consensus Estimate for third-quarter earnings declined 5.2%, while the same for full-year 2024 fell 0.5%.
Zacks Rank & Key Picks
Encore Capital currently has a Zacks Rank #4 (Sell).
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. (JXN - Free Report) , WisdomTree, Inc. (WT - Free Report) and HIVE Digital Technologies Ltd. (HIVE - Free Report) . While Jackson Financial currently sports a Zacks Rank #1 (Strong Buy), WisdomTree and HIVE Digital carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.49 per share, which indicates 44% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 67.6% year-over-year growth. During the past month, WT has witnessed three upward estimate revisions against none in the opposite direction. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 54.6% year-over-year improvement. During the past month, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $124.7 million, indicating an 8.9% increase from a year ago.
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Encore Capital (ECPG) Shares Rise 11.4% Since Q2 Earnings Beat
Encore Capital Group, Inc. (ECPG - Free Report) shares have gained 11.4% since it reported second-quarter 2024 results on Aug 7, 2024. The strong second-quarter results benefited from improving portfolio supply in the United States and rising collections. However, growth in expenses partially offset the upside.
ECPG reported second-quarter 2024 adjusted earnings per share (EPS) of $1.34, which beat the Zacks Consensus Estimate by 6.4%. The bottom line also reported an improvement of 24% year over year.
ECPG's revenues climbed 10% year over year to $355.3 million. Also, the top line beat the consensus mark by 3.2%.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Encore Capital Group Inc price-consensus-eps-surprise-chart | Encore Capital Group Inc Quote
Operational Update
Total debt purchasing revenues improved 10.1% year over year in the quarter under review to $327.7 million. Servicing revenues marginally grew in the second quarter of 2024 to $21.1 million but missed the consensus mark by 4.1%.
Global collections grew 15% year over year to $547 million and beat the consensus mark by 7.4% thanks to strong portfolio purchasing in the United States in the past couple of years and a stable collections environment in its key markets.
Total operating expenses of $253.4 million rose 7.9% year over year due to increased salaries and employee benefits, cost of legal collections and other operating expenses. Cash efficiency margin (cash receipts minus operating expenses minus impairment charges divided by cash receipts) increased to 53% in the second quarter from 51.2% a year ago.
Interest expenses increased 22.8% year over year to $61.4 million in the quarter under review. Encore Capital’s net income of $32.2 million improved 22% year over year.
Global portfolio purchases of $279 million rose from $274 million a year ago. It deployed $237 million in the U.S. andthe rest in Europe.
Financial Position (as of Jun 30, 2024)
Encore Capital exited the second quarter with total assets of $4.8 billion, higher than $4.6 billion at 2023-end. Cash and cash equivalents amounted to $250.6 million in the second quarter, higher than $158.4 million at 2023-end.
Borrowings increased from $3.32 billion at 2023-end to $3.46 billion. Total liabilities of $3.83 billion at the second-quarter end were higher than $3.69 billion at 2023 end. Total equity increased from $936.5 million at 2023-end to $988.1 million.
Net cash provided by operating activities increased 38.4% year over year in the first half of 2024 to $86.7 million.
2024 Guidance
Management expects portfolio purchasing to surpass the 2023 figure of $1.1 billion in 2024 and reach $1.15 billion. It expects collections to grow by around 11% to $2.075 billion in 2024.
Interest expenses are expected to be $250 million for 2024 due to bond refinancing.
Estimate Revisions
The company has witnessed four and two downward estimate revisions for the third quarter and full-year 2024 during the past 30 days against no upward movement. During this time, the Zacks Consensus Estimate for third-quarter earnings declined 5.2%, while the same for full-year 2024 fell 0.5%.
Zacks Rank & Key Picks
Encore Capital currently has a Zacks Rank #4 (Sell).
Investors interested in the broader Finance space may look at some better-ranked players like Jackson Financial Inc. (JXN - Free Report) , WisdomTree, Inc. (WT - Free Report) and HIVE Digital Technologies Ltd. (HIVE - Free Report) . While Jackson Financial currently sports a Zacks Rank #1 (Strong Buy), WisdomTree and HIVE Digital carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Jackson Financial’s current-year earnings is pegged at $18.49 per share, which indicates 44% year-over-year growth. It witnessed two upward estimate revisions in the past 30 days against no downward movement. The consensus mark for JXN’s current year revenues suggests a 116.7% surge from a year ago.
The Zacks Consensus Estimate for WisdomTree’s 2024 earnings indicates 67.6% year-over-year growth. During the past month, WT has witnessed three upward estimate revisions against none in the opposite direction. It beat earnings estimates twice in the past four quarters and met on the other occasions, with an average surprise of 5.9%.
The Zacks Consensus Estimate for HIVE Digital’s current-year earnings suggests a 54.6% year-over-year improvement. During the past month, HIVE has witnessed one upward estimate revision against none in the opposite direction. The consensus mark for current-year revenues is pegged at $124.7 million, indicating an 8.9% increase from a year ago.