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PRA Group's (PRAA) Q3 Earnings Lag Estimates, Decrease Y/Y

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PRA Group Inc.’s (PRAA - Free Report) third-quarter 2018 earnings per share of 22 cents missed the Zacks Consensus Estimate of 35 cents by 37.1%. Moreover, the bottom line declined 35.2% year over year. This was primarily due to the company’s major investments in the United States during the quarter under review. The company made the second highest quarterly investment of worth $170.4 million in Americas Core portfolios.

PRA Group, Inc. Price, Consensus and EPS Surprise

Its total revenues were $225 million, up 10.3% from the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate by 0.9% on the back of higher finance receivables of the company.

It witnessed global cash collection of $389.3 million, which rose 2% compared with 2017's third quarter, driven by collections from U.S. call center and U.S. legal collections. However, this was partially offset by a decline in Global Insolvency cash collections as well as other Americas Core cash.

Quarterly Operational Update

PRA Group’s fee income of $2.5 million decreased 4.1% year over year.

The company’s finance receivables during the reported period grew 11% year over year, primarily because of yield increases on certain pools in Americas Core and Europe Core along with Americas Core portfolio investment in 2017 and 2018.

Total operating expenses increased 18.2% year over year to $173.5 million. This deterioration was due to higher legal collection costs, more compensation and employee services, attributable to certain expansions of the company.

In the quarter under review, the company reported cash collections of $389 million, up nearly 2% from the prior-year quarter, aided by Americas Core. However, the same was partially offset by lower Global Insolvency cash collections and Americas Core cash collections.

Financial Update

As of Sep 30, 2018, the company has total assets of $3.6 billion, down 1.1% from the year-end 2017.

PRA Group exited the quarter with total equity of $1.1 billion, up 0.9% from the level on Dec 31, 2017.

 Cash and cash equivalents in the quarter under discussion were $114 million, down 5.3% from the year-end 2017.

In the quarter under consideration, borrowings inched up 1.1% to $2.19 billion.

The company invested $237.5 million in new finance receivables in the third quarter.

Zacks Rank and Performance of Other Players

PRA Group has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other financial miscellaneous service providers that have reported third-quarter earnings so far, the bottom line of Synchrony Financial (SYF - Free Report) , American Express Company (AXP - Free Report) and Euronet Worldwide, Inc. (EEFT - Free Report) beat the Zacks Consensus Estimate.

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