A month has gone by since the last earnings report for PRA Group, Inc. (PRAA - Free Report) . Shares have lost about 10% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 (PRAA - Free Report) Incurs Q4 Loss, Declares Management Changes
PRA Group incurred an operating loss of 33 cents per share in fourth-quarter 2016. The Zacks Consensus Estimate was of an operating earnings of 68 cents per share. The company had reported operating earnings of $1.03 per share in the year-ago quarter. The deterioration mainly stemmed from a substantial decline in revenues.
Net loss of 38 cents per share in the reported quarter compared unfavorably with earnings of $1.83 per share in the year-ago quarter. This was primarily because of a charge of $62.5 million against certain pools of finance receivables.
Operational Update
PRA Group’s total revenue of $155.3 million decreased 33% year over year due to lower income from finance receivables. Reported revenues also missed the Zacks Consensus Estimate of $219.5 million.
Additionally, PRA Group’s revenues from finance receivables income plunged 37% to $132 million. Fee income was up 7.7% to $21.2 million, while other revenues increased 2.8% to $2.1 million. Cash collections in the fourth quarter were $348.8 million, down 6% year over year.
Total operating expenses decreased 6.8% year over year to $148.2 million. This was mainly due to lower, compensation and employee service expenses, outside fees and services and other operating expenses.
PRA Group invested $199.8 million in new finance receivables in the fourth quarter, down 12% year over year.
Financial Update
As of Dec 31, 2016, PRA Group had total assets worth $3.2 billion, up 5.7% from year-end 2015. The company exited the quarter with total equity of $917 million, up 9.2% from Dec 31, 2015.
As of Dec 31, 2016, cash and cash equivalents were $94.3 million, up 32% year over year. This was because borrowings increased 3.5% year over year to $1.78 billion.
Annualized return on average equity was a negative 7.9% compared with a return of 19.8% in the year-ago quarter.
Management Change
The company announced a management succession plan that is aimed to steer the company to profitability. Per the plan, Kevin Stevenson, the current president and chief administrative officer, will succeed Steve Fredrickson as the chief executive officer of the company. Stevenson will take office following the 2017 Annual Meeting of Stockholders, which will be held on Jun 1, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 36% due to these changes.
VGM Scores
At this time, PRA Group's stock has a poor score of 'F' on both growth and momentum front. 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 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
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A month has gone by since the last earnings report for PRA Group, Inc. (PRAA - Free Report) . Shares have lost about 10% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it 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 (PRAA - Free Report) Incurs Q4 Loss, Declares Management Changes
PRA Group incurred an operating loss of 33 cents per share in fourth-quarter 2016. The Zacks Consensus Estimate was of an operating earnings of 68 cents per share. The company had reported operating earnings of $1.03 per share in the year-ago quarter. The deterioration mainly stemmed from a substantial decline in revenues.
Net loss of 38 cents per share in the reported quarter compared unfavorably with earnings of $1.83 per share in the year-ago quarter. This was primarily because of a charge of $62.5 million against certain pools of finance receivables.
Operational Update
PRA Group’s total revenue of $155.3 million decreased 33% year over year due to lower income from finance receivables. Reported revenues also missed the Zacks Consensus Estimate of $219.5 million.
Additionally, PRA Group’s revenues from finance receivables income plunged 37% to $132 million. Fee income was up 7.7% to $21.2 million, while other revenues increased 2.8% to $2.1 million. Cash collections in the fourth quarter were $348.8 million, down 6% year over year.
Total operating expenses decreased 6.8% year over year to $148.2 million. This was mainly due to lower, compensation and employee service expenses, outside fees and services and other operating expenses.
PRA Group invested $199.8 million in new finance receivables in the fourth quarter, down 12% year over year.
Financial Update
As of Dec 31, 2016, PRA Group had total assets worth $3.2 billion, up 5.7% from year-end 2015. The company exited the quarter with total equity of $917 million, up 9.2% from Dec 31, 2015.
As of Dec 31, 2016, cash and cash equivalents were $94.3 million, up 32% year over year. This was because borrowings increased 3.5% year over year to $1.78 billion.
Annualized return on average equity was a negative 7.9% compared with a return of 19.8% in the year-ago quarter.
Management Change
The company announced a management succession plan that is aimed to steer the company to profitability. Per the plan, Kevin Stevenson, the current president and chief administrative officer, will succeed Steve Fredrickson as the chief executive officer of the company. Stevenson will take office following the 2017 Annual Meeting of Stockholders, which will be held on Jun 1, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been two revisions lower for the current quarter. In the past month, the consensus estimate has shifted lower by 36% due to these changes.
VGM Scores
At this time, PRA Group's stock has a poor score of 'F' on both growth and momentum front. 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 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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