PRA Group Pre-Q3 Earnings: Should You Buy the Stock Now?

Financial and business services company PRA Group, Inc. PRAA is set to report its third-quarter 2024 results on Nov. 4, 2024, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 34 cents per share and $264.48 million, respectively.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.The earnings estimate for the to-be-reported quarter has remained stable over the past 60 days. The bottom-line projection indicates a year-over-year surge of 209.7%. Also, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 22.2%. Image Source: Zacks Investment ResearchFor the current year, the Zacks Consensus Estimate for PRA Group’s revenues is pegged at $1.07 billion, implying a rise of 33.8% year over year. Also, the consensus mark for current year EPS is pegged at $1.33, implying a jump of 162.4% on a year-over-year basis.PRA Group beat the consensus estimate for earnings in each of the trailing four quarters, with the average surprise being 299.4%, as you can see below.PRA Group, Inc. Price and EPS Surprise PRA Group, Inc. price-eps-surprise | PRA Group, Inc. QuotePRAA’s Q3 Earnings WhispersHowever, our proven model does not conclusively predict an earnings beat for PRA Group this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.PRAA has an Earnings ESP of 0.00% and a Zacks Rank #2.You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.You can see the complete list of today’s Zacks #1 Rank stocks here.Let’s see how things have shaped up before the third-quarter earnings announcement.Q3 Factors to Note for PRAAPRA Group is expected to have witnessed improved cash collections, higher portfolio income and solid purchasing activity in the third quarter. Growing strength in its European business is expected to have benefited its collections. The Zacks Consensus Estimate for third-quarter total cash collections indicates 15.1% year-over-year growth.Moreover, improved portfolio supply and pricing in the United States are likely to have aided its purchases. The Zacks Consensus Estimate for third-quarter Portfolio income is pegged at $218.3 million, indicating a rise of 14.9% year over year.Also, the consensus mark for changes in expected recoveries currently stands at $37 million, up 67% year over year. Legal collection spending is likely to moderate in the third quarter.The above-mentioned factors are likely to have positioned the company for year-over-year growth. However, the consensus mark for other revenues is pegged at $2.3 million, down 46.2% from a year ago.Total operating expenses are likely to have escalated in the quarter due to increased compensation and employee services, agency fees and other operating expenses, trimming its margins, making an earnings beat uncertain. As the company continues to undertake several initiatives to drive improvement in customer contact rates and expand legal processes, expenses are expected to rise as a result.PRAA’s Price Performance ComparisonPRA Group's stock has declined 23.7% in the year-to-date period against the industry’s rise of 9.2%. In comparison, some of its peers, like Encore Capital Group, Inc. ECPG and Credit Acceptance Corporation CACC, have fallen 8.6% and 13.3%, respectively, during this time. All of these had lagged the S&P 500 significantly, which has increased 22.2% during the same period.PRAA YTD Price Performance Image Source: Zacks Investment ResearchPRAA’s ValuationNow, let’s look at the value PRA Group offers investors at current levels.The company’s valuation looks relatively cheap compared with the industry average. Currently, PRAA is trading at 10.54X forward 12 months earnings, below the industry’s average of 15.04X. Image Source: Zacks Investment ResearchWhat Should Investors Do?Rising portfolio income, as a result of higher portfolio purchases, will support the company’s top-line growth in the coming days. Also, normalizing credit supply in the United States will likely lead to improved portfolio supply coupled with better returns.Although its leverage increased from 2021 levels, the current levels are not expected to constrain the company from capitalizing on supply growth. The company’s focus on improving efficiencies will further support its margin growth.With its improving cash collection, growing purchase volume, portfolio income and attractive valuation, current shareholders might consider holding. Prospective investors could see a buying opportunity and watch upcoming earnings for further insights.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want 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 Encore Capital Group Inc (ECPG): Free Stock Analysis Report Credit Acceptance Corporation (CACC): 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