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Should Value Investors Pick PRA Group (PRAA) Stock Now?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put PRA Group, Inc. (PRAA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, PRA Group has a trailing twelve months PE ratio of 18.57, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.35. If we focus on the long-term PE trend, PRA Group’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
However, the stock’s PE compares unfavorably with the sector’s trailing twelve months PE ratio, which stands at 12.39. This indicates that the stock is relatively overvalued right now, compared to its peers.
Nevertheless, we should point out that PRA Group has a forward PE ratio (price relative to this year’s earnings) of just 15.19, so it is fair to say that a slightly more value-oriented path may be ahead for PRA Group stock in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, PRA Group has a P/S ratio of about 1.65. This is lower than the S&P 500 average, which comes in at 3.23 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, PRAA is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, PRA Group currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes PRA Group a solid choice for value investors.
What About the Stock Overall?
Though PRA Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of D. This gives PRAA a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen three estimates go higher in the past sixty days compared to one lower, while the full year estimate has seen one upward and four downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 56.8% in the past two months, while the full year estimate has increased 12%.
Despite this positive trend, the stock has a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term.
Bottom Line
PRA Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the bottom 20%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Should Value Investors Pick PRA Group (PRAA) Stock Now?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
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One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put PRA Group, Inc. (PRAA - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, PRA Group has a trailing twelve months PE ratio of 18.57, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 19.35. If we focus on the long-term PE trend, PRA Group’s current PE level puts it below its midpoint over the past five years. Moreover, the current level is fairly below the highs for this stock, suggesting it might be a good entry point.
However, the stock’s PE compares unfavorably with the sector’s trailing twelve months PE ratio, which stands at 12.39. This indicates that the stock is relatively overvalued right now, compared to its peers.
Nevertheless, we should point out that PRA Group has a forward PE ratio (price relative to this year’s earnings) of just 15.19, so it is fair to say that a slightly more value-oriented path may be ahead for PRA Group stock in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, PRA Group has a P/S ratio of about 1.65. This is lower than the S&P 500 average, which comes in at 3.23 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, PRAA is in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, PRA Group currently has a Zacks Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes PRA Group a solid choice for value investors.
What About the Stock Overall?
Though PRA Group might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of D. This gives PRAA a Zacks VGM score—or its overarching fundamental grade—of B. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen three estimates go higher in the past sixty days compared to one lower, while the full year estimate has seen one upward and four downward revisions in the same time period.
As a result, the current quarter consensus estimate has risen by 56.8% in the past two months, while the full year estimate has increased 12%.
Despite this positive trend, the stock has a Zacks Rank #3 (Hold), which indicates expectations of in-line performance from the company in the near term.
Bottom Line
PRA Group is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among the bottom 20%) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>