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Here's Why You Should Retain PRA Group (PRAA) Stock Now
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PRA Group, Inc. (PRAA - Free Report) is well-poised to grow on the back of its strategic buyouts and Europe operations. The company’s ability to work with different types of debt will help with diversification.
PRA Group, with a market cap of $1.3 billion, is a global financial and business services company in the Americas, Australia and Europe. Its primary business involves the purchase, collection and management of portfolios of non-performing loans.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for PRA Group’s 2022 earnings is pegged at $2.80 per share, which has been unchanged over the past week. Our estimate suggests the metric to be at $2.73 per share. During this time, it has witnessed no movement in estimate revisions. The company beat earnings estimates in each of the last four quarters, the average being 40.3%.
The consensus estimate for 2022 revenues is pegged at $960.3 million, while our estimate suggests the metric to be $953.9 million.
Key Drivers
PRA Group’s Europe investments are becoming better over time. Europe’s insolvency is expected to improve going ahead. Europe Core’s cash collection on a constant-currency basis improved 2.2% year over year in the third quarter. A recovery of higher degree will likely help the company’s Europe operations.
Current market volatility and economic pressures affecting consumers might lead to higher charge-offs. This will create buying opportunities for companies like PRA Group and benefit in the long run. The economic environment in 2023 will likely play a major role in PRAA’s efforts to find the supply of new receivables.
PRA Group’s ability to work with different types of debt will likely be a crucial driver in the coming days. While credit card charge-offs can help the company to generate a significant amount of cash, its programs focusing on other types of debts will help the company in the long term with diversification.
Its moves to reduce costs through diverting legal cash collections to in-house operators can boost profits. Digital collections are expected to help the company raise its margins. Our estimate suggests total operating expenses for 2022 to decline 6.1% from the 2021 reported level.
Strategic buyouts bode well for the company’s inorganic growth. PRAA increased its footfall in Northern Europe and South America with prudent acquisitions. Taking its presence beyond the primary debt collection business, and stepping into government collections and audit services was a wise move by the management.
PRA Group’s disciplined capital management is praiseworthy. This helped the company continue its capital deployment activities. It bought back shares worth $25 million in the third quarter. There was an available repurchase capacity of $68 million as of Sep 30, 2022.
Key Concerns
There are a few factors that can hold the stock back. The longer the company has to wait for acquiring quality receivables, its revenues will continue declining. Its efforts to increase margins will provide some respite during the tough times.
The stock currently has a forward 12-month price to earnings of 16.19X, higher than the industry average of 10.45X, making it overvalued. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Headquartered in Milwaukee, WI, MGIC Investment provides private mortgage insurance and other products in the domestic markets and internationally. The Zacks Consensus Estimate for MTG’s current-year earnings indicates a 49.7% increase from the prior-year reported number.
Based in Chattanooga, TN, Unum is a financial protection benefit solutions provider. The Zacks Consensus Estimate for UNM’s 2022 bottom line indicates a 43.5% improvement from that reported a year ago.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 78.1% improvement from that reported a year ago.
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Here's Why You Should Retain PRA Group (PRAA) Stock Now
PRA Group, Inc. (PRAA - Free Report) is well-poised to grow on the back of its strategic buyouts and Europe operations. The company’s ability to work with different types of debt will help with diversification.
PRA Group, with a market cap of $1.3 billion, is a global financial and business services company in the Americas, Australia and Europe. Its primary business involves the purchase, collection and management of portfolios of non-performing loans.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Trend in Estimates
The Zacks Consensus Estimate for PRA Group’s 2022 earnings is pegged at $2.80 per share, which has been unchanged over the past week. Our estimate suggests the metric to be at $2.73 per share. During this time, it has witnessed no movement in estimate revisions. The company beat earnings estimates in each of the last four quarters, the average being 40.3%.
PRA Group, Inc. Price and EPS Surprise
PRA Group, Inc. price-eps-surprise | PRA Group, Inc. Quote
The consensus estimate for 2022 revenues is pegged at $960.3 million, while our estimate suggests the metric to be $953.9 million.
Key Drivers
PRA Group’s Europe investments are becoming better over time. Europe’s insolvency is expected to improve going ahead. Europe Core’s cash collection on a constant-currency basis improved 2.2% year over year in the third quarter. A recovery of higher degree will likely help the company’s Europe operations.
Current market volatility and economic pressures affecting consumers might lead to higher charge-offs. This will create buying opportunities for companies like PRA Group and benefit in the long run. The economic environment in 2023 will likely play a major role in PRAA’s efforts to find the supply of new receivables.
PRA Group’s ability to work with different types of debt will likely be a crucial driver in the coming days. While credit card charge-offs can help the company to generate a significant amount of cash, its programs focusing on other types of debts will help the company in the long term with diversification.
Its moves to reduce costs through diverting legal cash collections to in-house operators can boost profits. Digital collections are expected to help the company raise its margins. Our estimate suggests total operating expenses for 2022 to decline 6.1% from the 2021 reported level.
Strategic buyouts bode well for the company’s inorganic growth. PRAA increased its footfall in Northern Europe and South America with prudent acquisitions. Taking its presence beyond the primary debt collection business, and stepping into government collections and audit services was a wise move by the management.
PRA Group’s disciplined capital management is praiseworthy. This helped the company continue its capital deployment activities. It bought back shares worth $25 million in the third quarter. There was an available repurchase capacity of $68 million as of Sep 30, 2022.
Key Concerns
There are a few factors that can hold the stock back. The longer the company has to wait for acquiring quality receivables, its revenues will continue declining. Its efforts to increase margins will provide some respite during the tough times.
The stock currently has a forward 12-month price to earnings of 16.19X, higher than the industry average of 10.45X, making it overvalued. Nevertheless, we believe that a systematic and strategic plan of action will drive its long-term growth.
Key Picks
Some better-ranked stocks in the broader finance space are MGIC Investment Corporation (MTG - Free Report) , Unum Group (UNM - Free Report) and NerdWallet, Inc. (NRDS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Milwaukee, WI, MGIC Investment provides private mortgage insurance and other products in the domestic markets and internationally. The Zacks Consensus Estimate for MTG’s current-year earnings indicates a 49.7% increase from the prior-year reported number.
Based in Chattanooga, TN, Unum is a financial protection benefit solutions provider. The Zacks Consensus Estimate for UNM’s 2022 bottom line indicates a 43.5% improvement from that reported a year ago.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 78.1% improvement from that reported a year ago.