Encore Capital Group, Inc. ECPG looks like a good investment option right now, driven by strong fundamentals, and good earnings and sales growth prospects.
The Zacks Consensus Estimate for the company’s current-year earnings has been revised 3.9% upward over the past 30 days, reflecting that analysts are optimistic regarding its earnings growth potential. Thus, the stock currently carries a Zacks Rank #2 (Buy).
Moreover, the company’s price performance looks impressive. Its shares have gained 55.4% so far this year, outperforming 28.5% growth recorded by the industry.
Here are a few other aspects that make Encore Capital an attractive investment option now.
Revenue Strength: The company’s revenues rose at a CAGR of 6.9% over the last five years (2014-2018). The uptrend is expected to continue in the near term as reflected by its projected sales growth rates of 2.8% for 2019 and 3.9% for 2020.
Earnings per Share (EPS) Growth: Encore Capital witnessed EPS growth of 0.6% over the last three-five years. Moreover, the company’s projected earnings growth rates of 13.5% for 2019 and 9.3% for 2020 ensure the continuation of this upward trend.
Further, its long-term (three-five years) EPS growth rate of 15% promises reward for investors.
Notably, the company has a decent earnings surprise history. It recorded average positive earnings surprise of 10.1% over the trailing four quarters.
Superior Return on Equity (ROE): Encore Capital’s ROE is 19.85%, higher than the industry average of 13.60%. This indicates that the company reinvests cash more efficiently than the industry.
Favorable Valuation: The stock looks undervalued right now in terms of its price/sales (P/S) and price/earnings (P/E) ratios. The company has a P/S ratio of 0.84, which is below the industry average of 1.53. Moreover, its P/E (F1) ratio of 6.62 stands lower than the industry average of 7.50.
Further, the stock currently has a Value Score of A. Our research shows that stocks with a Style Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best upside potential.
Other Key Picks
Over the past 60 days, TriplePoint Venture Growth BDC Corp. TPVG has witnessed an upward earnings estimate revision of 1.2% for the current year. Additionally, the stock has gained around 51.2% so far this year. It currently carries a Zacks Rank #2.
T. Rowe Price Group, Inc.’s TROW earnings estimates for 2019 have moved 3.9% upward over the past 60 days. The stock has gained 16.8% year to date. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Gladstone Investment Corporation’s GAIN Zacks Consensus Estimate for earnings for the current fiscal year has been revised 6.2% upward over the past 60 days. The stock has gained nearly 24.8% so far this year. It currently carries a Zacks Rank #2.
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T. Rowe Price Group, Inc. (TROW) : Free Stock Analysis Report
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Encore Capital Group Inc (ECPG) : Free Stock Analysis Report
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