From the vast universe of banking stocks, today we pick Encore Capital Group Inc. ECPG for you. The company offers a profitable investment opportunity based on steady earnings growth and robust fundamentals.
It has been witnessing upward estimate revisions, reflecting analysts’ optimism surrounding its earnings growth potential. Over the past 30 days, the Zacks Consensus Estimate for 2019 and 2020 has displayed an upward trend with a 4.1% and 2.4% jump, respectively.
Also, the price performance seems impressive. This Zacks Rank #2 (Buy) stock has gained 51.8% year to date compared with the industry’s rally of 31.9%.
Why Encore Capital is an Attractive Pick
Revenue Strength: The company’s revenues saw a CAGR of 6.9% over the last five years (2014-2018). The 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. Moreover, the company’s projected earnings growth rates of 18.1% and 7.5% for 2019 and 2020, respectively, ensure the continuation of this trend.
Further, the company’s long-term (three-five years) EPS growth rate of 12% promises reward for investors. Notably, Encore Capital has a decent earnings surprise history. It delivered average positive earnings surprise of 15.3% over the trailing four quarters.
Superior Return on Equity (ROE): Encore Capital’s ROE of 20.8%, compared with the industry average of 13.7%, reflects the company’s commendable position over its peers.
Stock is Undervalued: The stock currently has a Value Score of A. The Value Score condenses all valuation metrics into one actionable score that helps investors steer clear of “value traps” and identify stocks that are truly trading at a discount. 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.
Considering the above positive traits, we believe investing in Encore Capital should not disappoint you.
Other Stocks to Consider
Enova International, Inc. ENVA has been witnessing upward estimate revisions for the past 30 days. Additionally, the stock has jumped more than 14% 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 30 days. Also, the company’s shares have risen nearly 63.6% 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 30 days. Also, the company’s shares have risen nearly 37.9% year to date. It carries a Zacks Rank of 2, at present.
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