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3 Reasons to Add Encore Capital (ECPG) Stock to Your Portfolio
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Supported by solid fundamentals and good growth prospects, Encore Capital Group, Inc. (ECPG - Free Report) stock looks like an attractive investment option now. Moreover, the Federal Reserve’s decision to raise interest rates this year to tackle the red-hot inflation will be beneficial for consumer loan providers.
Given the rate hikes in March, May and mid-June, along with expectations of more this year, consumer loan providers are expected to witness solid improvement in their top lines and margins. Thus, adding one such company to your portfolio seems to be a good decision right now.
ECPG has also been witnessing upward earnings estimate revisions of late, reflecting analysts’ optimism regarding its earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised 57.5% upward. Thus, the company currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of Encore Capital have gained 20.1% over the past year against a decline of 28% recorded by the industry.
Image Source: Zacks Investment Research
Some other factors mentioned below make Encore Capital stock an attractive investment option now.
Earnings per Share (EPS) Growth: The company witnessed EPS growth of 33.6% in the last three to five years, higher than the industry average of 19.6%. The upward trend is expected to continue in the near term. ECPG’s earnings are projected to grow 14.4% in 2022.
It also has an impressive earnings surprise history. ECPG’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 80.4%.
Superior Return on Equity (ROE): Encore Capital’s ROE is 33.89% compared with the industry average of 18.66%. This indicates that it reinvests its cash more efficiently than the industry.
Favorable Valuation: The company seems to be trading at a discount with respect to its price/earnings (P/E) and price/sales (P/S) ratios. Currently, it has a P/E (F1) ratio of 4.52, which is below the industry average of 5.52. Also, its P/S ratio of 0.83 compares favorably with the industry average of 1.15.
Moreover, the stock currently has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
The consensus estimate for S&T Bancorp’s current-year earnings has been revised 5.4% upward over the past 60 days. Over the past year, STBA’s share price has declined 12.1%.
Credit Acceptance’s current-year earnings estimates have been revised 11.8% upward over the past 60 days. CACC’s shares have gained 4.1% over the past year.
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3 Reasons to Add Encore Capital (ECPG) Stock to Your Portfolio
Supported by solid fundamentals and good growth prospects, Encore Capital Group, Inc. (ECPG - Free Report) stock looks like an attractive investment option now. Moreover, the Federal Reserve’s decision to raise interest rates this year to tackle the red-hot inflation will be beneficial for consumer loan providers.
Given the rate hikes in March, May and mid-June, along with expectations of more this year, consumer loan providers are expected to witness solid improvement in their top lines and margins. Thus, adding one such company to your portfolio seems to be a good decision right now.
ECPG has also been witnessing upward earnings estimate revisions of late, reflecting analysts’ optimism regarding its earnings growth potential. Over the past 60 days, the Zacks Consensus Estimate for the company’s 2022 earnings has been revised 57.5% upward. Thus, the company currently carries a Zacks Rank #2 (Buy).
Looking at its price performance, shares of Encore Capital have gained 20.1% over the past year against a decline of 28% recorded by the industry.
Image Source: Zacks Investment Research
Some other factors mentioned below make Encore Capital stock an attractive investment option now.
Earnings per Share (EPS) Growth: The company witnessed EPS growth of 33.6% in the last three to five years, higher than the industry average of 19.6%. The upward trend is expected to continue in the near term. ECPG’s earnings are projected to grow 14.4% in 2022.
It also has an impressive earnings surprise history. ECPG’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 80.4%.
Superior Return on Equity (ROE): Encore Capital’s ROE is 33.89% compared with the industry average of 18.66%. This indicates that it reinvests its cash more efficiently than the industry.
Favorable Valuation: The company seems to be trading at a discount with respect to its price/earnings (P/E) and price/sales (P/S) ratios. Currently, it has a P/E (F1) ratio of 4.52, which is below the industry average of 5.52. Also, its P/S ratio of 0.83 compares favorably with the industry average of 1.15.
Moreover, the stock currently has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Stocks Worth Considering
A couple of other top-ranked stocks from the finance space are S&T Bancorp, Inc. (STBA - Free Report) and Credit Acceptance Corporation (CACC - Free Report) . Currently, STBA sports a Zacks Rank of 1, while CACC carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for S&T Bancorp’s current-year earnings has been revised 5.4% upward over the past 60 days. Over the past year, STBA’s share price has declined 12.1%.
Credit Acceptance’s current-year earnings estimates have been revised 11.8% upward over the past 60 days. CACC’s shares have gained 4.1% over the past year.