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Portfolio Income Growth Aids PRA Group's (PRAA) Q4 Earnings
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PRA Group, Inc. (PRAA - Free Report) incurred a fourth-quarter 2023 loss of 22 cents per share, narrower than the Zacks Consensus Estimate of a loss of 35 cents per share. Notably, the company reported earnings of 41 cents per share in the prior-year quarter.
Total revenues of $221.4 million fell 0.6% year over year in the quarter under review. However, the top line outpaced the consensus mark by 5.3%.
The better-than-expected fourth-quarter results gained from robust portfolio income, growing cash collection, improving pricing and better operational results in Brazil and Europe. Its shares jumped 12.4% in the pre-market session. However, the upside was partially offset by increased expenses and weakness in the U.S. business.
Total cash collections of PRA Group grew 4.8% year over year to $410.3 million, which missed the Zacks Consensus Estimate by 1.6%. The metric benefited on the back of higher cash collections from Brazil and Europe, partially offset by decreased collections in the United States.
The portfolio income of $194.6 million advanced 5.3% year over year in the fourth quarter and marginally surpassed the consensus mark. Other revenues increased 4.8% year over year to more than $4 million, but missing the consensus mark by 4.6%.
Total operating expenses of $175.9 million jumped 7.6% year over year due to higher compensation and employee services, legal collection costs, agency fees, communication and other operating expenses.
PRA Group incurred a net loss of $5.9 million in the quarter under review against the prior-year quarter’s net income of $17.1 million.
It purchased nonperforming loan portfolios of $284.9 million in the fourth quarter, which dropped 1.1% year over year. The cash efficiency ratio was at 57.3%. The estimated remaining collections (“ERC”) of PRA Group amounted to $6.4 billion at the fourth-quarter end.
Financial Update (As of Dec 31, 2023)
PRA Group exited the fourth quarter with cash and cash equivalents of $112.5 million, which climbed from the $83.4 million level at 2022 end. It had $1.3 billion remaining under its credit facilities at the fourth-quarter end. Total assets of $4.5 billion increased from the 2022-end figure of $4.2 billion.
Borrowings were $2.9 billion, up from the $2.5 billion figure as of Dec 31, 2022. Total equity of $1.2 billion slipped from the 2022-end level of $1.3 billion.
Full Year Results
For 2023, total revenues decreased 17% from the 2022 level to $802.6 million due to lower portfolio income and other revenues. Total operating expenses rose 3.1% year over year to $702.1 million. It reported a loss per share of $2.13 for 2023 against earnings of $2.94 in 2022.
Forward View
For 2024, it expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRAA expects cash collections in 2024 to witness double-digit growth. Its shift to lower-cost locations and expense management is likely to result in modest growth in expenses.
The effective tax rate is expected in the low 20% range this year. The cash efficiency ratio is projected at more than 60% for 2024. It also expects a return on average tangible equity within 6-8% for the year. PRA Group is likely to collect an ERC balance of $1.5 billion within the next 12 months.
The consensus mark for Alerus Financial’s 2024 full-year earnings is pegged at $1.53 per share, which improved 11.7% over the past month. ALRS beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 14.4%.
The Zacks Consensus Estimate for World Acceptance’s current-year earnings is pegged at $12.71 per share, indicating a significant increase from $3.60 a year ago. It has witnessed two upward estimate revisions against none in the opposite direction during the past month. WRLD beat earnings estimates in each of the past four quarters, with an average surprise of 59.8%.
The Zacks Consensus Estimate for Primis Financial’s 2024 full-year earnings is pegged at $1.57 per share, which indicates 68.8% year-over-year growth. FRST has witnessed three upward estimate revisions against none in the opposite direction during the past month.
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Portfolio Income Growth Aids PRA Group's (PRAA) Q4 Earnings
PRA Group, Inc. (PRAA - Free Report) incurred a fourth-quarter 2023 loss of 22 cents per share, narrower than the Zacks Consensus Estimate of a loss of 35 cents per share. Notably, the company reported earnings of 41 cents per share in the prior-year quarter.
Total revenues of $221.4 million fell 0.6% year over year in the quarter under review. However, the top line outpaced the consensus mark by 5.3%.
The better-than-expected fourth-quarter results gained from robust portfolio income, growing cash collection, improving pricing and better operational results in Brazil and Europe. Its shares jumped 12.4% in the pre-market session. However, the upside was partially offset by increased expenses and weakness in the U.S. business.
PRA Group, Inc. Price, Consensus and EPS Surprise
PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote
Quarterly Operational Update
Total cash collections of PRA Group grew 4.8% year over year to $410.3 million, which missed the Zacks Consensus Estimate by 1.6%. The metric benefited on the back of higher cash collections from Brazil and Europe, partially offset by decreased collections in the United States.
The portfolio income of $194.6 million advanced 5.3% year over year in the fourth quarter and marginally surpassed the consensus mark. Other revenues increased 4.8% year over year to more than $4 million, but missing the consensus mark by 4.6%.
Total operating expenses of $175.9 million jumped 7.6% year over year due to higher compensation and employee services, legal collection costs, agency fees, communication and other operating expenses.
PRA Group incurred a net loss of $5.9 million in the quarter under review against the prior-year quarter’s net income of $17.1 million.
It purchased nonperforming loan portfolios of $284.9 million in the fourth quarter, which dropped 1.1% year over year. The cash efficiency ratio was at 57.3%. The estimated remaining collections (“ERC”) of PRA Group amounted to $6.4 billion at the fourth-quarter end.
Financial Update (As of Dec 31, 2023)
PRA Group exited the fourth quarter with cash and cash equivalents of $112.5 million, which climbed from the $83.4 million level at 2022 end. It had $1.3 billion remaining under its credit facilities at the fourth-quarter end. Total assets of $4.5 billion increased from the 2022-end figure of $4.2 billion.
Borrowings were $2.9 billion, up from the $2.5 billion figure as of Dec 31, 2022. Total equity of $1.2 billion slipped from the 2022-end level of $1.3 billion.
Full Year Results
For 2023, total revenues decreased 17% from the 2022 level to $802.6 million due to lower portfolio income and other revenues. Total operating expenses rose 3.1% year over year to $702.1 million. It reported a loss per share of $2.13 for 2023 against earnings of $2.94 in 2022.
Forward View
For 2024, it expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRAA expects cash collections in 2024 to witness double-digit growth. Its shift to lower-cost locations and expense management is likely to result in modest growth in expenses.
The effective tax rate is expected in the low 20% range this year. The cash efficiency ratio is projected at more than 60% for 2024. It also expects a return on average tangible equity within 6-8% for the year. PRA Group is likely to collect an ERC balance of $1.5 billion within the next 12 months.
Zacks Rank & Key Picks
PRA Group currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader Finance space are Alerus Financial Corporation (ALRS - Free Report) , World Acceptance Corporation (WRLD - Free Report) and Primis Financial Corp. (FRST - Free Report) , each currently sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus mark for Alerus Financial’s 2024 full-year earnings is pegged at $1.53 per share, which improved 11.7% over the past month. ALRS beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 14.4%.
The Zacks Consensus Estimate for World Acceptance’s current-year earnings is pegged at $12.71 per share, indicating a significant increase from $3.60 a year ago. It has witnessed two upward estimate revisions against none in the opposite direction during the past month. WRLD beat earnings estimates in each of the past four quarters, with an average surprise of 59.8%.
The Zacks Consensus Estimate for Primis Financial’s 2024 full-year earnings is pegged at $1.57 per share, which indicates 68.8% year-over-year growth. FRST has witnessed three upward estimate revisions against none in the opposite direction during the past month.