PRA Group (PRAA) Down 14% Since Last Earnings Report: Can It Rebound?

It has been about a month since the last earnings report for PRA Group (PRAA). Shares have lost about 14% in that time frame, underperforming the S&P 500.Will the recent negative trend continue leading up to its next earnings release, or is PRA Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts. PRA Group's Q3 Earnings Beat EstimatesPRA Group’s strong third quarter results benefited from strong cash collections and purchases. Moreover, the company showed optimism in achieving its 2024 targets and expects accelerated progress in 2025, driving investor confidence upward. However, rising expenses partially offset the positives.PRAA reported third-quarter 2024 earnings per share of 49 cents, which beat the Zacks Consensus Estimate by 44.1%. A loss of 31 cents per share was incurred in the prior-year quarter.Total revenues climbed 30.1% year over year to $281.5 million. The top line surpassed the consensus mark by 6.4%.Quarterly Operational UpdatePRA Group’s cash collections were $477.1 million, which increased 13.7% year over year but missed the Zacks Consensus Estimate of $483 million. The metric benefited on the back of improved cash collections across the United States and Europe.Portfolio income rose 13.8% year over year to $216.1 million but missed the consensus mark of $218 million. Other revenues of $4.7 million increased 9.9% year over year and beat the Zacks Consensus Estimate of $2.3 million. Total operating expenses escalated 10.4% year over year to $191.5 million due to increased compensation and employee services, legal collection costs and fees, agency fees and other operating expenses.PRAA reported a net income of $27.2 million against a loss of $12.2 million in the prior-year quarter.The company purchased nonperforming loan portfolios of $350 million, up 12% year over year. The cash efficiency ratio was 60.1%. The estimated remaining collections (ERC) amounted to $7.3 billion at the third-quarter end.Financial Update (as of Sept. 30, 2024)PRA Group exited the third quarter with cash and cash equivalents of $141.1 million, which grew 25.4% from the 2023-end level. It had $1 billion remaining under its credit facilities at the third-quarter end.Total assets of $4.9 billion increased 9.1% from the figure at 2023-end.Borrowings were $3.3 billion, up 13.1% from the figure as of Dec. 31, 2023.Total equity of $1.3 billion increased 3.4% from the 2023-end level.Revised OutlookFor 2024, the company still expects solid portfolio investment levels on the back of higher U.S. portfolio supply and favorable returns. PRAA continues to forecast cash collections to witness double-digit growth. Management expects legal collection costs in the fourth quarter to be in the low $30 million. Modest expense growth is expected for 2024.The effective tax rate is expected to be in the high to mid-teens range this year. The cash efficiency ratio is projected at around 60% for 2024. It now expects a return on average tangible equity of more than 8%. PRA Group is likely to collect an ERC balance of $1.7 billion within the next 12 months.For 2025, the company expects portfolio purchases to surpass $1 billion. Cash collections are expected to grow in the range of 8 in 2025. The cash efficiency ratio is projected to be around 60% for 2025. PRAA anticipates a double digit return on average tangible equity for 2025.How Have Estimates Been Moving Since Then?It turns out, estimates revision have trended upward during the past month.The consensus estimate has shifted 24.07% due to these changes.VGM ScoresAt this time, PRA Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, PRA Group has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerPRA Group belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Bread Financial Holdings (BFH), has gained 15.9% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.Bread Financial reported revenues of $983 million in the last reported quarter, representing a year-over-year change of -4.7%. EPS of $1.84 for the same period compares with $3.46 a year ago.For the current quarter, Bread Financial is expected to post earnings of $0.25 per share, indicating a change of -72.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -27.1% over the last 30 days.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Bread Financial. Also, the stock has a VGM Score of C.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is among the most innovative financial firms. With a fast-growing customer base (already 50+ million) and a diverse set of cutting edge solutions, this stock is poised for big gains. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report PRA Group, Inc. (PRAA): Free Stock Analysis Report Bread Financial Holdings, Inc. (BFH): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks