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Encore Capital Stock Soars 73.8% YTD: Is There Further Upside Left?
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Key Takeaways
Encore Capital benefits from strong U.S. portfolio supply, record collections and a growing ERC balance.
ECPG raised 2026 guidance for purchases of $1.40-$1.50B and GAAP EPS of $13-$14.
U.S. concentration, rising legal expenses and funding costs could pressure margins and earnings growth.
Shares of Encore Capital Group, Inc. (ECPG - Free Report) have skyrocketed 73.8% so far in 2026 against the industry’s decline of 16.2%. In the same period, the S&P 500 has gained 17.2%.
ECPG stock has also fared better than its peers, Credit Acceptance Corporation (CACC - Free Report) and PRA Group, Inc. (PRAA - Free Report) . Year to date, Credit Acceptance and PRA Group shares have rallied 19.7% and 10.2%, respectively.
YTD Price Performance
Image Source: Zacks Investment Research
The Federal Reserve’s recent 25-basis-point rate hike and hawkish stance are likely to work in Encore Capital’s favor by keeping borrowing costs elevated and adding pressure on consumers. This may fuel credit card delinquencies and charge-offs, boosting the supply of debt portfolios available for purchase. With this backdrop supporting its core business, does ECPG stock still have room to run despite recent price strength?
Let us take a closer look at its fundamentals and growth prospects.
Key Factors Supporting Encore Capital
Robust U.S. Supply & Collection Strength: The United States remains Encore Capital’s primary growth market, supported by high revolving credit balances, elevated charge-off rates, and stable consumer payment behavior. In the first half of 2026, U.S. receivable portfolio purchases reached $688.1 million, while global purchases totaled $806.7 million. Smaller buyers continue to face regulatory and funding constraints, supporting a favorable competitive environment for Encore Capital. Management expects 2026 portfolio purchases of $1.4-$1.5 billion, with the majority of deployment directed toward U.S. opportunities. The company’s scale, analytics capabilities, and funding access are expected to enable disciplined purchasing despite modestly higher portfolio pricing.
Outstanding U.S. Revolving Credit and U.S. Credit Card Charge-Off Rate
Image Source: Encore Capital Group, Inc.
Collection performance is adding further support to the earnings outlook. Enhanced consumer outreach, new technologies, digital capabilities, advanced analytics, and a growing payer base helped Encore Capital generate $99 million in cash overs in the first half of 2026, while global collections reached a record $1.46 billion. U.S. vintage multiples were 2.5x for 2024, 2.4x for 2025, and 2.3x for 2026.
Estimated Remaining Collections (ERC) reached $10.18 billion as of June 30, 2026, up 9% year over year. Management expects the contribution from cash overs to increasingly shift toward portfolio revenues as ERC curves are revised upward. The Zacks Consensus Estimate projects 2026 and 2027 sales to increase 8.9% and 2.1% year over year, respectively.
Sales Estimate
Image Source: Zacks Investment Research
Selective European Deployment Protects Returns: Encore Capital continues to prioritize disciplined capital deployment in Europe as subdued consumer lending, low delinquencies and strong competition weigh on the U.K. market. Its Cabot business is focusing on fresher portfolios, forward-flow arrangements, cost management and the adoption of MCM best practices. Portfolio purchases reached $118.6 million in the first six months of 2026, while collections increased to $325.4 million. This selective approach may constrain near-term purchase growth, but it helps preserve return thresholds and keeps Cabot positioned to capitalize on more attractive supply opportunities as it continues to emphasize cost and operational improvements in the business.
Balance Sheet Strength Supports Capital Deployment: Encore Capital continues to preserve financial flexibility while operating within its targeted 2.0x-3.0x leverage range and maintaining its objective of a strong BB debt rating. Leverage was 2.3x as of June 30, 2026, down from 2.6x a year ago. The company had $793.4 million available under its revolvers and facilities and no significant debt maturities until 2028.
In May, Encore Capital refinanced approximately $1 billion of debt through two lower-coupon bonds, further extending its maturity profile. These resources provide flexibility to fund portfolio purchases while supporting share repurchases and other capital allocation initiatives. As of June 30, 2026, approximately $255 million remained available under the share repurchase authorization. Its 29.83% ROE, compared with the 12.49% industry average, further highlights its capital efficiency.
Debt Maturity Profile
Image Source: Encore Capital Group, Inc. Higher 2026 Guidance Signals Earnings Momentum: Encore Capital raised its full-year 2026 outlook, reflecting expectations for continued growth in portfolio purchases and collections. The company now expects portfolio purchases of $1.40-$1.50 billion, collections of $2.80-$2.85 billion, and GAAP EPS of $13.00-$14.00, including a $1 per share impact from refinancing costs.
The Zacks Consensus Estimate projects earnings to increase from $10.91 per share in 2025 to $13.52 in 2026 and $14.64 in 2027. Higher collections, disciplined portfolio deployment, favorable macro trends and potential upward revisions to ERC are expected to support portfolio revenue and earnings growth.
Earnings Estimate
Image Source: Zacks Investment Research
Challenges Faced by Encore Capital
U.S. Concentration: Encore Capital’s growth remains heavily dependent on favorable U.S. credit conditions. Midland Credit Management (MCM) accounted for 85.3% of global portfolio purchasing dollars in the first half of 2026, while the U.K. market remains subdued due to lower consumer lending, low delinquencies, and continued competition. Although management expects U.S. purchasing conditions and consumer payment behavior to remain favorable, limited geographic diversification could leave the company more exposed if U.S. portfolio supply, pricing or collections performance deteriorates. A reversal in charge-off trends or payment behavior could therefore weigh on portfolio deployment, collections and earnings growth.
Higher Collection and Funding Costs Could Pressure Margins: Encore Capital’s earnings remain sensitive to rising collection-related expenses and funding costs. Legal collections expenses increased 25.8% year over year in the first half of 2026, compared with 7.5% growth in total operating expenses, potentially limiting operating leverage if collection growth moderates. At the same time, borrowings rose to $4.18 billion as of June 30, 2026, from $4.0 billion at year-end 2025, while first-half interest expense totaled $147.0 million. The May refinancing extended maturities and is expected to save approximately $15 million annually, but generated $30.5 million of refinancing costs in the second quarter. With 2026 interest expense and other income expected at about $295 million, higher funding costs combined with elevated legal expenses could weigh on cash efficiency, margins, and earnings if portfolio returns or collections growth weaken.
ECPG’s Valuation Analysis
In terms of valuation, Encore Capital stock is currently trading at a forward 12-month price-to-earnings (P/E) of 6.58X, compared with the industry average of 7.33X. This indicates that the stock is trading at a discount to the industry.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Moreover, ECPG is trading at a discount to Credit Acceptance, while trading at a premium to PRA Group. At present, Credit Acceptance and PRA Group trade at a trailing 12-month P/E of 10.05X and 5.26X, respectively.
How Should You Approach ECPG Stock Now?
Encore Capital appears well positioned for continued growth, supported by robust U.S. portfolio supply, strong collection performance, disciplined portfolio deployment, and improving earnings visibility. Record MCM collections, a growing expected remaining collections balance, disciplined European strategy, and favorable U.S. purchasing conditions are expected to support portfolio revenues, while balance sheet flexibility and expense management provide capacity for further investments and capital returns.
Although U.S. concentration, rising legal collection expenses and reliance on debt financing remain risks, Encore Capital’s updated 2026 guidance reflects a clear earnings-growth framework. Currently, ECPG stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
View the Zacks #1 Rank List
Image: Bigstock
Encore Capital Stock Soars 73.8% YTD: Is There Further Upside Left?
Key Takeaways
Shares of Encore Capital Group, Inc. (ECPG - Free Report) have skyrocketed 73.8% so far in 2026 against the industry’s decline of 16.2%. In the same period, the S&P 500 has gained 17.2%.
ECPG stock has also fared better than its peers, Credit Acceptance Corporation (CACC - Free Report) and PRA Group, Inc. (PRAA - Free Report) . Year to date, Credit Acceptance and PRA Group shares have rallied 19.7% and 10.2%, respectively.
YTD Price Performance
Image Source: Zacks Investment Research
The Federal Reserve’s recent 25-basis-point rate hike and hawkish stance are likely to work in Encore Capital’s favor by keeping borrowing costs elevated and adding pressure on consumers. This may fuel credit card delinquencies and charge-offs, boosting the supply of debt portfolios available for purchase. With this backdrop supporting its core business, does ECPG stock still have room to run despite recent price strength?
Let us take a closer look at its fundamentals and growth prospects.
Key Factors Supporting Encore Capital
Robust U.S. Supply & Collection Strength: The United States remains Encore Capital’s primary growth market, supported by high revolving credit balances, elevated charge-off rates, and stable consumer payment behavior. In the first half of 2026, U.S. receivable portfolio purchases reached $688.1 million, while global purchases totaled $806.7 million. Smaller buyers continue to face regulatory and funding constraints, supporting a favorable competitive environment for Encore Capital. Management expects 2026 portfolio purchases of $1.4-$1.5 billion, with the majority of deployment directed toward U.S. opportunities. The company’s scale, analytics capabilities, and funding access are expected to enable disciplined purchasing despite modestly higher portfolio pricing.
Outstanding U.S. Revolving Credit and U.S. Credit Card Charge-Off Rate
Image Source: Encore Capital Group, Inc.
Collection performance is adding further support to the earnings outlook. Enhanced consumer outreach, new technologies, digital capabilities, advanced analytics, and a growing payer base helped Encore Capital generate $99 million in cash overs in the first half of 2026, while global collections reached a record $1.46 billion. U.S. vintage multiples were 2.5x for 2024, 2.4x for 2025, and 2.3x for 2026.
Estimated Remaining Collections (ERC) reached $10.18 billion as of June 30, 2026, up 9% year over year. Management expects the contribution from cash overs to increasingly shift toward portfolio revenues as ERC curves are revised upward. The Zacks Consensus Estimate projects 2026 and 2027 sales to increase 8.9% and 2.1% year over year, respectively.
Sales Estimate
Image Source: Zacks Investment Research
Selective European Deployment Protects Returns: Encore Capital continues to prioritize disciplined capital deployment in Europe as subdued consumer lending, low delinquencies and strong competition weigh on the U.K. market. Its Cabot business is focusing on fresher portfolios, forward-flow arrangements, cost management and the adoption of MCM best practices. Portfolio purchases reached $118.6 million in the first six months of 2026, while collections increased to $325.4 million. This selective approach may constrain near-term purchase growth, but it helps preserve return thresholds and keeps Cabot positioned to capitalize on more attractive supply opportunities as it continues to emphasize cost and operational improvements in the business.
Balance Sheet Strength Supports Capital Deployment: Encore Capital continues to preserve financial flexibility while operating within its targeted 2.0x-3.0x leverage range and maintaining its objective of a strong BB debt rating. Leverage was 2.3x as of June 30, 2026, down from 2.6x a year ago. The company had $793.4 million available under its revolvers and facilities and no significant debt maturities until 2028.
In May, Encore Capital refinanced approximately $1 billion of debt through two lower-coupon bonds, further extending its maturity profile. These resources provide flexibility to fund portfolio purchases while supporting share repurchases and other capital allocation initiatives. As of June 30, 2026, approximately $255 million remained available under the share repurchase authorization. Its 29.83% ROE, compared with the 12.49% industry average, further highlights its capital efficiency.
Debt Maturity Profile
Image Source: Encore Capital Group, Inc.
Higher 2026 Guidance Signals Earnings Momentum: Encore Capital raised its full-year 2026 outlook, reflecting expectations for continued growth in portfolio purchases and collections. The company now expects portfolio purchases of $1.40-$1.50 billion, collections of $2.80-$2.85 billion, and GAAP EPS of $13.00-$14.00, including a $1 per share impact from refinancing costs.
The Zacks Consensus Estimate projects earnings to increase from $10.91 per share in 2025 to $13.52 in 2026 and $14.64 in 2027. Higher collections, disciplined portfolio deployment, favorable macro trends and potential upward revisions to ERC are expected to support portfolio revenue and earnings growth.
Earnings Estimate
Image Source: Zacks Investment Research
Challenges Faced by Encore Capital
U.S. Concentration: Encore Capital’s growth remains heavily dependent on favorable U.S. credit conditions. Midland Credit Management (MCM) accounted for 85.3% of global portfolio purchasing dollars in the first half of 2026, while the U.K. market remains subdued due to lower consumer lending, low delinquencies, and continued competition. Although management expects U.S. purchasing conditions and consumer payment behavior to remain favorable, limited geographic diversification could leave the company more exposed if U.S. portfolio supply, pricing or collections performance deteriorates. A reversal in charge-off trends or payment behavior could therefore weigh on portfolio deployment, collections and earnings growth.
Higher Collection and Funding Costs Could Pressure Margins: Encore Capital’s earnings remain sensitive to rising collection-related expenses and funding costs. Legal collections expenses increased 25.8% year over year in the first half of 2026, compared with 7.5% growth in total operating expenses, potentially limiting operating leverage if collection growth moderates. At the same time, borrowings rose to $4.18 billion as of June 30, 2026, from $4.0 billion at year-end 2025, while first-half interest expense totaled $147.0 million. The May refinancing extended maturities and is expected to save approximately $15 million annually, but generated $30.5 million of refinancing costs in the second quarter. With 2026 interest expense and other income expected at about $295 million, higher funding costs combined with elevated legal expenses could weigh on cash efficiency, margins, and earnings if portfolio returns or collections growth weaken.
ECPG’s Valuation Analysis
In terms of valuation, Encore Capital stock is currently trading at a forward 12-month price-to-earnings (P/E) of 6.58X, compared with the industry average of 7.33X. This indicates that the stock is trading at a discount to the industry.
Price-to-Earnings F12M
Image Source: Zacks Investment Research
Moreover, ECPG is trading at a discount to Credit Acceptance, while trading at a premium to PRA Group. At present, Credit Acceptance and PRA Group trade at a trailing 12-month P/E of 10.05X and 5.26X, respectively.
How Should You Approach ECPG Stock Now?
Encore Capital appears well positioned for continued growth, supported by robust U.S. portfolio supply, strong collection performance, disciplined portfolio deployment, and improving earnings visibility. Record MCM collections, a growing expected remaining collections balance, disciplined European strategy, and favorable U.S. purchasing conditions are expected to support portfolio revenues, while balance sheet flexibility and expense management provide capacity for further investments and capital returns.
Although U.S. concentration, rising legal collection expenses and reliance on debt financing remain risks, Encore Capital’s updated 2026 guidance reflects a clear earnings-growth framework. Currently, ECPG stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.