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PRA Group (PRAA) Up 4.2% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for PRA Group (PRAA - Free Report) . Shares have added about 4.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PRA Group due for a pullback? 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 drivers.
PRA Group's Q2 Earnings Beat on Strong Portfolio Income
PRA Group 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.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 45.71% due to these changes.
VGM Scores
At this time, PRA Group has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PRA Group has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
PRA Group belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Lazard (LAZ - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Lazard reported revenues of $684.64 million in the last reported quarter, representing a year-over-year change of +10.4%. EPS of $0.52 for the same period compares with $0.24 a year ago.
Lazard is expected to post earnings of $0.43 per share for the current quarter, representing a year-over-year change of +330%. Over the last 30 days, the Zacks Consensus Estimate has changed -13.3%.
Lazard has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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PRA Group (PRAA) Up 4.2% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for PRA Group (PRAA - Free Report) . Shares have added about 4.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is PRA Group due for a pullback? 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 drivers.
PRA Group's Q2 Earnings Beat on Strong Portfolio Income
PRA Group 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.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed an upward trend in fresh estimates.
The consensus estimate has shifted 45.71% due to these changes.
VGM Scores
At this time, PRA Group has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise PRA Group has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
PRA Group belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Lazard (LAZ - Free Report) , has gained 9% over the past month. More than a month has passed since the company reported results for the quarter ended June 2024.
Lazard reported revenues of $684.64 million in the last reported quarter, representing a year-over-year change of +10.4%. EPS of $0.52 for the same period compares with $0.24 a year ago.
Lazard is expected to post earnings of $0.43 per share for the current quarter, representing a year-over-year change of +330%. Over the last 30 days, the Zacks Consensus Estimate has changed -13.3%.
Lazard has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.