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Encore Capital (ECPG) Q1 Earnings and Revenues Miss, Up Y/Y
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Encore Capital Group, Inc. (ECPG - Free Report) reported first-quarter 2018 adjusted net income of 98 cents per share, which missed the Zacks Consensus Estimate by 4.8%. However, the bottom line improved 3.2% year over year, driven by a consistently growing supply of charged-off credit card debt and purchase of large amounts of receivables with highest returns.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Including one-time items, the company posted net income of 83 cents per share, down 2.4% from the prior-year quarter.
First-Quarter Operational Update
Total revenues at Encore Capital rose 20.2% year over year to $327 million. This upside is primarily driven by higher revenues from receivable portfolios. However, the top line lagged the Zacks Consensus Estimate by 0.3%.
Gross collections grew 11% year over year to $489 million from $441 million in the year-ago quarter.
Estimated remaining collections were at record high of $7.1 billion, up 21% year over year.
In the reported quarter, total operating expenses of $238 million increased 21.4% year over year. This is attributable to expenditure with respect to collections capacity expansion, higher legal spending in the U.S. and Wescot-related expenses.
Financial Update
As of Mar 31, 2018, total assets of the company were $4.64 billion, up 3.4% from the level at 2017 end.
As of Mar 31, 2018, Encore Capital had cash and cash equivalents of $217.1 million, up 2.3% from Dec 31, 2017.
As of Mar 31, 2018, investment in receivable portfolio totaled $302.4 million, up 4.6% from year-end 2017.
Total debt amounted to $3.6 billion, up 4.6% from the 2017-end level.
As of Mar 31, 2018, total shareholders’ equity was $610.8 million, up 4.9% from year-end 2017.
Encore Capital’s cash from operations plunged 96.2% year over year to $1 million in the quarter under review.
Business Update
The company announced an agreement to acquire the remaining interest in Cabot Credit Management for 5 million shares of Encore common stock and $238.2 million in cash. The transaction is estimated to close on Jun 30, 2018. The agreement is expected to be accretive to 2018 earnings and beyond. The Encore earnings growth is expected to accelerate to around 20% this year. The transaction will consolidate Encore Capital’s leading presence in the United States and the UK.
Among other consumer loans provider, which have already reported first-quarter earnings, the bottom line of SLM Corporation (SLM - Free Report) , Capital One Financial Corporation (COF - Free Report) , and Discover Financial Services (DFS - Free Report) outpaced the respective Zacks Consensus Estimate.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Encore Capital (ECPG) Q1 Earnings and Revenues Miss, Up Y/Y
Encore Capital Group, Inc. (ECPG - Free Report) reported first-quarter 2018 adjusted net income of 98 cents per share, which missed the Zacks Consensus Estimate by 4.8%. However, the bottom line improved 3.2% year over year, driven by a consistently growing supply of charged-off credit card debt and purchase of large amounts of receivables with highest returns.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Encore Capital Group Inc Price, Consensus and EPS Surprise | Encore Capital Group Inc Quote
Including one-time items, the company posted net income of 83 cents per share, down 2.4% from the prior-year quarter.
First-Quarter Operational Update
Total revenues at Encore Capital rose 20.2% year over year to $327 million. This upside is primarily driven by higher revenues from receivable portfolios. However, the top line lagged the Zacks Consensus Estimate by 0.3%.
Gross collections grew 11% year over year to $489 million from $441 million in the year-ago quarter.
Estimated remaining collections were at record high of $7.1 billion, up 21% year over year.
In the reported quarter, total operating expenses of $238 million increased 21.4% year over year. This is attributable to expenditure with respect to collections capacity expansion, higher legal spending in the U.S. and Wescot-related expenses.
Financial Update
As of Mar 31, 2018, total assets of the company were $4.64 billion, up 3.4% from the level at 2017 end.
As of Mar 31, 2018, Encore Capital had cash and cash equivalents of $217.1 million, up 2.3% from Dec 31, 2017.
As of Mar 31, 2018, investment in receivable portfolio totaled $302.4 million, up 4.6% from year-end 2017.
Total debt amounted to $3.6 billion, up 4.6% from the 2017-end level.
As of Mar 31, 2018, total shareholders’ equity was $610.8 million, up 4.9% from year-end 2017.
Encore Capital’s cash from operations plunged 96.2% year over year to $1 million in the quarter under review.
Business Update
The company announced an agreement to acquire the remaining interest in Cabot Credit Management for 5 million shares of Encore common stock and $238.2 million in cash. The transaction is estimated to close on Jun 30, 2018. The agreement is expected to be accretive to 2018 earnings and beyond. The Encore earnings growth is expected to accelerate to around 20% this year. The transaction will consolidate Encore Capital’s leading presence in the United States and the UK.
Zacks Rank
Encore Capital carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players
Among other consumer loans provider, which have already reported first-quarter earnings, the bottom line of SLM Corporation (SLM - Free Report) , Capital One Financial Corporation (COF - Free Report) , and Discover Financial Services (DFS - Free Report) outpaced the respective Zacks Consensus Estimate.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>