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Encore Capital (ECPG) Rallies 53.6% YTD: What's Driving It?

Zacks Equity Research

Shares of Encore Capital Group Inc ECPG have surged nearly 53.6%, year to date, compared with the industry’s growth of approximately 30.7%. Solid fundamentals, driven by credit management, as well as inorganic expansion strategy, along with steady revenues, seem to be the primary reasons for this impressive performance.

Further, this Zacks Rank #2 (Buy) stock has been witnessing solid estimate revisions. Over the last 30 days, the Zacks Consensus Estimate jumped 4.1% to $5.88 for 2019 and 2.4% to $6.32 for 2020.

Also, the stock currently has a VGM 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.

Moreover, Encore Capital has an impressive earnings surprise history. The company surpassed estimates in three of the trailing four quarters, the average beat being15.28%.


While past performance does not guarantee a similar trend in the future, we believe the following factors are adequate to support a steady price appreciation for Encore Capital:

Revenue Strength: The company’s revenues witnessed a CAGR of 6.9% over the last five years (2014-2018). This uptrend is expected to continue in the near term, as its sales growth rates for 2019 and 2020 are projected at 2.7% and 3.8%, respectively.

Earnings Per Share Growth: Encore Capital’s EPS grew 2.1% over the last three-five years. In addition, the company’s projected earnings growth rate of 18.1% and 7.5% for 2019 and 2020, respectively, ensures continuation of this trend. Further, the company’s long-term (three-five years) EPS growth rate of 12% promises reward for investors.

Superior Return on Equity (ROE): Encore Capital’s ROE of 20.9%, compared with the industry average of 13.7%, reflects the company’s commendable position over its peers.

Other Stocks to Consider

Enova International, Inc. ENVA has been witnessing upward estimate revisions for the past 60 days. Additionally, the stock has jumped more than 18.5%, so far this year. It currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Navient Corporation NAVI has been witnessing upward estimate revisions for the past 60 days. Also, the company’s shares have risen nearly 59.7% year to date. It sports a Zacks Rank of 1, at present.

CURO Group Holdings Corp. CURO has been witnessing upward estimate revisions over the past 60 days. Also, the company’s shares have rallied 46.3%, year to date. It carries a Zacks Rank of 2, at present.

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