We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you accept our Privacy Policy and Terms of Service, revised from time to time, and you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Encore Capital's (ECPG) Shares Up 11.2% Since Q1 Earnings Beat
Read MoreHide Full Article
Encore Capital Group’s (ECPG - Free Report) shares gained 11.2% since it reported first-quarter 2024 results on May 8, 2024. The strong first-quarter earnings benefited from improving portfolio supply in the United States and rising collections. Continued growth in lending, coupled with higher delinquencies and charge-offs, supported the company’s record supply of non-performing loans in the quarter. However, slow growth in the U.K. and European markets partially offset the results.
ECPG reported first-quarter 2024 adjusted earnings per share (EPS) of 95 cents, which beat the Zacks Consensus Estimate by 1.1%. The bottom line also reported an improvement of 1.1% year over year.
ECPG's revenues climbed 5% year over year to $328.4 million. However, the top line missed the consensus mark of $329 million.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Total debt purchasing revenue improved 6% year over year in the quarter under review. Servicing revenues deteriorated 9.8% year over year in the first quarter of 2024 and missed the consensus mark by 7.4%. Collections grew 10% year over year to $511 million and beat the consensus mark by 3.1%.
Total operating expenses of $244.8 million rose nearly 1% year over year due to increased salaries and employee benefits, cost of legal collections and other operating expenses. Cash efficiency margin (cash receipts minus operating expenses minus impairment charges divided by cash receipts) improved 50 basis points (bps) year over year to 52.2% in the first quarter.
Interest expenses increased 19.1% year over year to $55.8 million in the quarter under review. Encore Capital’s net loss of $23.2 million improved 25% year over year.
Midland Credit Management’s portfolio purchases were $237 million, which rose 11.3% year over year in the first quarter of 2024. Cabot’s portfolio purchases declined 6% year over year in the first quarter as the company is being selective in purchasing portfolios in a competitive European market.
Financial Position (as of Mar 31, 2024)
Encore Capital exited the first quarter with total assets of $4.7 billion, higher than $4.6 billion at 2023-end. Cash and cash equivalents amounted to $178 million in the first quarter, higher than $158.4 million at 2023-end.
Borrowings increased from $3.3 billion at 2023-end to $3.4 billion. Total liabilities of $3.73 billion at the first-quarter end were higher than $3.69 billion at 2023-end. Total equity increased from $936.5 million at 2023-end to $953.9 million.
Net cash provided by operating activities increased 42% year over year in the first quarter of 2024.
2024 Guidance
Management expects portfolio purchasing to surpass the 2023 figure of $1.1 billion in 2024. It expects collections to grow by approximately 8% to $2 billion in 2024.
Interest expenses were revised upward to $245-$250 million for 2024 due to bond refinancing. Effective tax rate is expected to be in the mid-20s in 2024.
The company expects collections efficiency margin to improve over the 2023 level.
Here are some other Finance sector players that have reported first-quarter results so far. The bottom-line results of Euronet Worldwide, Inc. (EEFT - Free Report) , Virtu Financial, Inc. (VIRT - Free Report) and Cboe Global Markets, Inc. (CBOE - Free Report) beat the Zacks Consensus Estimate.
Euronet reported first-quarter adjusted earnings of $1.28 per share, which surpassed the Zacks Consensus Estimate by 28%. The bottom line soared 47%. Total revenues were $857 million, which improved 9% year over year and on a constant-currency basis. The top line beat the consensus mark by 2.3%. EEFT’s net income climbed 32.3% year over year to $26.2 million. Operating income of $64 million advanced 40% year over year, or 45% on a constant-currency basis. Adjusted EBITDA rose 17% year over year, or 19% on a constant-currency basis, to $108.8 million.
The EFT Processing segment recorded revenues of $217.2 million, which grew 13% year over year, or 12% on a constant-currency basis. Adjusted EBITDA soared 51% year over year, or 54% on a constant-currency basis, to $44.7 million. Total transactions of the unit climbed 36% to 2,502 million. The epay segment’s revenues advanced 8% year over year and on a constant-currency basis to $257.1 million. The Money Transfer segment generated revenues of $384.6 million, which advanced 7% year over year and on a constant-currency basis.
Virtu Financial reported first-quarter 2024 adjusted earnings per share of 76 cents, which outpaced the Zacks Consensus Estimate by 28.8%. The bottom line advanced 2.7% year over year. Total revenues improved 3.6% to $642.8 million. Adjusted net trading income slid 1.7% to $366.9 million. Revenues from commissions, net and technology services amounted to $118.6 million, which slipped 2.3% year over year. Interest and dividends income of $106 million climbed 28.9% year over year.
Adjusted EBITDA of VIRT declined 2.2% to $202.8 million. Adjusted EBITDA margin of 55.3% deteriorated 30 basis points year over year. Adjusted net trading income in the Market Making segment was $273.7 million, down 1.5% year over year. The segment’s revenues rose 4.4% to $521 million. The Execution Services unit recorded an adjusted net trading income of $93.2 million, which fell 2.1% year over year.
Cboe Global reported first-quarter 2024 adjusted earnings of $2.15 per share, which outpaced the Zacks Consensus Estimate by 5.4%. The bottom line increased 13% year over year. Total adjusted revenues of CBOE Global were $502.1 million, which improved 7% year over year. The top line missed the consensus mark by 1.2%. Options revenues climbed 10% to $307.4 million. Revenues of North American Equities totaled $92.6 million, which decreased 1% year over year. Europe and Asia Pacific revenues increased 10% to $54.1 million.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report predicting the 7 stocks that will soar highest in the coming month.
Image: Bigstock
Encore Capital's (ECPG) Shares Up 11.2% Since Q1 Earnings Beat
Encore Capital Group’s (ECPG - Free Report) shares gained 11.2% since it reported first-quarter 2024 results on May 8, 2024. The strong first-quarter earnings benefited from improving portfolio supply in the United States and rising collections. Continued growth in lending, coupled with higher delinquencies and charge-offs, supported the company’s record supply of non-performing loans in the quarter. However, slow growth in the U.K. and European markets partially offset the results.
ECPG reported first-quarter 2024 adjusted earnings per share (EPS) of 95 cents, which beat the Zacks Consensus Estimate by 1.1%. The bottom line also reported an improvement of 1.1% year over year.
ECPG's revenues climbed 5% year over year to $328.4 million. However, the top line missed the consensus mark of $329 million.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Encore Capital Group Inc price-consensus-eps-surprise-chart | Encore Capital Group Inc Quote
Operational Update
Total debt purchasing revenue improved 6% year over year in the quarter under review. Servicing revenues deteriorated 9.8% year over year in the first quarter of 2024 and missed the consensus mark by 7.4%. Collections grew 10% year over year to $511 million and beat the consensus mark by 3.1%.
Total operating expenses of $244.8 million rose nearly 1% year over year due to increased salaries and employee benefits, cost of legal collections and other operating expenses. Cash efficiency margin (cash receipts minus operating expenses minus impairment charges divided by cash receipts) improved 50 basis points (bps) year over year to 52.2% in the first quarter.
Interest expenses increased 19.1% year over year to $55.8 million in the quarter under review. Encore Capital’s net loss of $23.2 million improved 25% year over year.
Midland Credit Management’s portfolio purchases were $237 million, which rose 11.3% year over year in the first quarter of 2024. Cabot’s portfolio purchases declined 6% year over year in the first quarter as the company is being selective in purchasing portfolios in a competitive European market.
Financial Position (as of Mar 31, 2024)
Encore Capital exited the first quarter with total assets of $4.7 billion, higher than $4.6 billion at 2023-end. Cash and cash equivalents amounted to $178 million in the first quarter, higher than $158.4 million at 2023-end.
Borrowings increased from $3.3 billion at 2023-end to $3.4 billion. Total liabilities of $3.73 billion at the first-quarter end were higher than $3.69 billion at 2023-end. Total equity increased from $936.5 million at 2023-end to $953.9 million.
Net cash provided by operating activities increased 42% year over year in the first quarter of 2024.
2024 Guidance
Management expects portfolio purchasing to surpass the 2023 figure of $1.1 billion in 2024. It expects collections to grow by approximately 8% to $2 billion in 2024.
Interest expenses were revised upward to $245-$250 million for 2024 due to bond refinancing. Effective tax rate is expected to be in the mid-20s in 2024.
The company expects collections efficiency margin to improve over the 2023 level.
Zacks Rank
Encore Capital currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players
Here are some other Finance sector players that have reported first-quarter results so far. The bottom-line results of Euronet Worldwide, Inc. (EEFT - Free Report) , Virtu Financial, Inc. (VIRT - Free Report) and Cboe Global Markets, Inc. (CBOE - Free Report) beat the Zacks Consensus Estimate.
Euronet reported first-quarter adjusted earnings of $1.28 per share, which surpassed the Zacks Consensus Estimate by 28%. The bottom line soared 47%. Total revenues were $857 million, which improved 9% year over year and on a constant-currency basis. The top line beat the consensus mark by 2.3%. EEFT’s net income climbed 32.3% year over year to $26.2 million. Operating income of $64 million advanced 40% year over year, or 45% on a constant-currency basis. Adjusted EBITDA rose 17% year over year, or 19% on a constant-currency basis, to $108.8 million.
The EFT Processing segment recorded revenues of $217.2 million, which grew 13% year over year, or 12% on a constant-currency basis. Adjusted EBITDA soared 51% year over year, or 54% on a constant-currency basis, to $44.7 million. Total transactions of the unit climbed 36% to 2,502 million. The epay segment’s revenues advanced 8% year over year and on a constant-currency basis to $257.1 million. The Money Transfer segment generated revenues of $384.6 million, which advanced 7% year over year and on a constant-currency basis.
Virtu Financial reported first-quarter 2024 adjusted earnings per share of 76 cents, which outpaced the Zacks Consensus Estimate by 28.8%. The bottom line advanced 2.7% year over year. Total revenues improved 3.6% to $642.8 million. Adjusted net trading income slid 1.7% to $366.9 million. Revenues from commissions, net and technology services amounted to $118.6 million, which slipped 2.3% year over year. Interest and dividends income of $106 million climbed 28.9% year over year.
Adjusted EBITDA of VIRT declined 2.2% to $202.8 million. Adjusted EBITDA margin of 55.3% deteriorated 30 basis points year over year. Adjusted net trading income in the Market Making segment was $273.7 million, down 1.5% year over year. The segment’s revenues rose 4.4% to $521 million. The Execution Services unit recorded an adjusted net trading income of $93.2 million, which fell 2.1% year over year.
Cboe Global reported first-quarter 2024 adjusted earnings of $2.15 per share, which outpaced the Zacks Consensus Estimate by 5.4%. The bottom line increased 13% year over year. Total adjusted revenues of CBOE Global were $502.1 million, which improved 7% year over year. The top line missed the consensus mark by 1.2%. Options revenues climbed 10% to $307.4 million. Revenues of North American Equities totaled $92.6 million, which decreased 1% year over year. Europe and Asia Pacific revenues increased 10% to $54.1 million.