PRA Group (PRAA) is positioned for growth with improving cash collection efficiency

From Nasdaq: 2024-04-08 10:49:00

PRA Group, Inc., with a market cap of $992.6 million, is poised for growth with improving cash collection efficiency in the U.S. market and better-than-expected portfolio purchases. The company specializes in the acquisition, collection, and management of non-performing loans, positioning it well for effective portfolio diversification.

The Zacks Consensus Estimate for PRA Group’s 2024 bottom line shows significant improvement, with three upward estimate revisions in the past 30 days. The company beat earnings estimates in three of the last four quarters, indicating positive performance trends. The consensus estimate for 2024 revenues is $961.6 million, reflecting expected growth.

In the fourth quarter, PRA Group saw notable success in non-performing loan portfolio acquisitions, totaling $284.9 million. The company purchased portfolios worth $1.2 billion in 2023, a 36% increase year over year. With a focus on digital capabilities, the cash efficiency ratio is expected to improve, reaching the low 60s level in 2024 from 58% in 2023.

Some key concerns for PRA Group include its high total debt to total capital ratio of 71%, exceeding the industry average. Rising operating costs, legal collection fees, and agency fees are also denting margins. Despite these challenges, a strategic plan is in place to drive long-term growth and performance improvements.

Other finance sector stocks worth considering are Coinbase Global, Inc., Enact Holdings, and CNO Financial Group, each holding a Zacks Rank #1 (Strong Buy). Coinbase Global, with a history of exceeding earnings estimates, has seen shares rise significantly. Enact Holdings and CNO Financial Group also show positive earnings growth estimates for 2024 and 2025, signaling strong potential for investment.

Read more at Nasdaq.: Here’s Why You Should Retain PRA Group (PRAA) Stock for Now