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Here's Why You Should Retain PRA Group (PRAA) Stock for Now
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PRA Group, Inc. (PRAA - Free Report) is well-poised to grow due to its improving cash collection efficiency in the U.S. market and better-than-expected portfolio purchases. The company's adeptness in managing diverse debt types positions it strategically for effective portfolio diversification.
PRA Group — with a market cap of $992.6 million — is a global financial and business services company in the Americas, Australia and Europe. The company specializes in the acquisition, collection and management of non-performing loans, constituting its core business activities. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for PRA Group’s 2024 bottom line indicates an improvement of more than one-fold. It has witnessed three upward estimate revisions against none in the opposite direction in the past 30 days. The company beat earnings estimates in three of the last four quarters and missed once. This is depicted in the graph below.
The consensus estimate for 2024 revenues stands at $961.6 million. Its performance is expected to improve in 2024 as the company intends to make more profitable purchases, which will constitute a larger part of its portfolio.
PRA Group is expected to capitalize on improving portfolio supply and pricing in the United States amid ongoing credit normalization. This positive purchasing environment is a key factor contributing to the company's anticipated growth in the bottom line. Moreover, rising industry credit card balances and higher charge-off and delinquency rates should fuel supply in the United States.
In the fourth quarter, PRA Group made notable strides in its non-performing loan portfolio acquisitions, totaling $284.9 million. The company purchased portfolios worth $1.2 billion in 2023, up 36% year over year. With modernizing collections, the cash efficiency ratio is likely to grow. Its focus on investments in boosting digital capabilities and technologies can play a major role in future performance.
The cash efficiency ratio was 58% in 2023. The metric is likely to touch the low 60s level in 2024, improving from the past few quarter levels due to several internal initiatives.
Key Concerns
There are a few factors that can hold the stock back. Its total debt to total capital of 71% is much higher than the industry’s figure of 57.9%. A rise in borrowing costs and increased leverage are leading to higher interest expenses.
Also, rising operating costs are a concern. Increasing legal collection costs and agency fees are denting margins. The metrics jumped 16.1% and 17.1% year over year, respectively, in 2023. However, we believe that a systematic and strategic plan of action will drive its long-term growth.
Coinbase Global has a solid track record of beating earnings estimates in each of the last four quarters, the average being 377.57%. In the past year, shares of COIN have skyrocketed 286.4%.
The Zacks Consensus Estimate for COIN’s 2024 and 2025 earnings has moved 66.3% and 114.7% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Enact Holdings delivered a four-quarter average earnings surprise of 24.59%. In a year, shares of ACT have soared 33.5%.
The Zacks Consensus Estimate for ACT’s 2024 and 2025 earnings has moved up 0.7% and 1.5%, respectively, in the past 30 days.
The Zacks Consensus Estimate for CNO Financial’s 2024 and 2025 earnings implies year-over-year growth of 2.5% and 7.1%, respectively, from the consensus estimate of the corresponding years. In a year, shares of CNO have rallied 19.6%.
CNO’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 3.62%.
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Here's Why You Should Retain PRA Group (PRAA) Stock for Now
PRA Group, Inc. (PRAA - Free Report) is well-poised to grow due to its improving cash collection efficiency in the U.S. market and better-than-expected portfolio purchases. The company's adeptness in managing diverse debt types positions it strategically for effective portfolio diversification.
PRA Group — with a market cap of $992.6 million — is a global financial and business services company in the Americas, Australia and Europe. The company specializes in the acquisition, collection and management of non-performing loans, constituting its core business activities. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for PRA Group’s 2024 bottom line indicates an improvement of more than one-fold. It has witnessed three upward estimate revisions against none in the opposite direction in the past 30 days. The company beat earnings estimates in three of the last four quarters and missed once. This is depicted in the graph below.
PRA Group, Inc. Price and EPS Surprise
PRA Group, Inc. price-eps-surprise | PRA Group, Inc. Quote
The consensus estimate for 2024 revenues stands at $961.6 million. Its performance is expected to improve in 2024 as the company intends to make more profitable purchases, which will constitute a larger part of its portfolio.
PRA Group is expected to capitalize on improving portfolio supply and pricing in the United States amid ongoing credit normalization. This positive purchasing environment is a key factor contributing to the company's anticipated growth in the bottom line. Moreover, rising industry credit card balances and higher charge-off and delinquency rates should fuel supply in the United States.
In the fourth quarter, PRA Group made notable strides in its non-performing loan portfolio acquisitions, totaling $284.9 million. The company purchased portfolios worth $1.2 billion in 2023, up 36% year over year. With modernizing collections, the cash efficiency ratio is likely to grow. Its focus on investments in boosting digital capabilities and technologies can play a major role in future performance.
The cash efficiency ratio was 58% in 2023. The metric is likely to touch the low 60s level in 2024, improving from the past few quarter levels due to several internal initiatives.
Key Concerns
There are a few factors that can hold the stock back. Its total debt to total capital of 71% is much higher than the industry’s figure of 57.9%. A rise in borrowing costs and increased leverage are leading to higher interest expenses.
Also, rising operating costs are a concern. Increasing legal collection costs and agency fees are denting margins. The metrics jumped 16.1% and 17.1% year over year, respectively, in 2023. However, we believe that a systematic and strategic plan of action will drive its long-term growth.
Stocks to Consider
Some better-ranked stocks from the finance sector are Coinbase Global, Inc. (COIN - Free Report) , Enact Holdings (ACT - Free Report) and CNO Financial Group (CNO - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Coinbase Global has a solid track record of beating earnings estimates in each of the last four quarters, the average being 377.57%. In the past year, shares of COIN have skyrocketed 286.4%.
The Zacks Consensus Estimate for COIN’s 2024 and 2025 earnings has moved 66.3% and 114.7% north, respectively, in the past 30 days, reflecting analysts’ optimism.
Enact Holdings delivered a four-quarter average earnings surprise of 24.59%. In a year, shares of ACT have soared 33.5%.
The Zacks Consensus Estimate for ACT’s 2024 and 2025 earnings has moved up 0.7% and 1.5%, respectively, in the past 30 days.
The Zacks Consensus Estimate for CNO Financial’s 2024 and 2025 earnings implies year-over-year growth of 2.5% and 7.1%, respectively, from the consensus estimate of the corresponding years. In a year, shares of CNO have rallied 19.6%.
CNO’s earnings surpassed estimates in two of the last four quarters and missed in the other two, the average surprise being 3.62%.