PRA Group, Inc.’s PRAA shares rose 1.5% since it reported better-than-expected results on Aug 8. Its results were supported by decreased operating expenses and higher fee income. The positives were partially offset by reduced cash collections in the Americas and Australia Core, coupled with reduced portfolio income
PRA Group reported second-quarter 2022 earnings per share of 91 cents, beating the Zacks Consensus Estimate of 53 cents. However, the bottom line decreased from $1.22 per share a year ago.
Total revenues of $258.3 million were down from the year-ago quarter’s $285.6 million. However, the top line beat the Zacks Consensus Estimate of $233 million.
PRA Group, Inc. Price, Consensus and EPS Surprise
PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote
Quarterly Operational Update
PRAA’s cash collection of $444.1 million decreased from the year-ago figure of $543.8 million due to a decrease in the Americas and Australia Core, Americas Insolvency, Europe Core and Europe Insolvency collections. U.S. call center and other collections declined 32.5% year over year in the second quarter. Similar traits were witnessed in the U.S. legal collections.
PRA Group’s fee income of $6.5 million increased from $2.5 million a year ago. Its portfolio income came in at $194 million during the quarter under review, down from $219.1 million in the prior-year quarter.
Total operating expenses were down to $174.5 million from $181.4 million a year ago on lower compensation and employee services, legal collection costs and fees, outside fees, communication and other operating costs.
PRA Group purchased $231.3 million of nonperforming loan portfolios in the quarter under review. Its cash efficiency ratio declined to 61.3% in the second quarter, down from 66.8% in the year-ago period. Estimated remaining collections in the second quarter were $5.6 billion, the majority of which were in the United States.
Share Repurchase Update
PRAA bought back shares worth $34.9 million in the second quarter of 2022. Last February, management authorized a new $150-million program upon completion of the previous program. At the second quarter-end, PRA Group had $92.7 million under its share buyback authorization.
Financial Update (as of Jun 30, 2022)
PRAA had total assets worth $4,088.8 million at the second quarter-end, down from the $4,366.2 million level at the 2021 end. Cash and cash equivalents in the quarter under discussion were $68 million, down from $87.6 million at the 2021 end.
At the end of the June quarter, borrowings decreased to $2,481.6 million from $2,608.7 million in 2021 end. PRA Group exited the second quarter with total equity of $1,242.4 million, down from $1,324.8 million as of Dec 31, 2021.
Net cash used in operating activities amounted to $41.8 million in the first half of 2022 compared with the operating cash flow of $21.6 million a year ago.
PRA Group has plans to keep boosting its products and market share. It expects the sales volume to increase by 2022 end. PRAA plans to continue its growth in Australia. Also, the company expects the credit card charge-off rates to increase in the coming days, as the current level is unsustainable.
Zacks Rank & Key Picks
Owl Rock Capital currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader finance space are FlexShopper, Inc. FPAY, SmartFinancial, Inc. SMBK and Paramount Group, Inc. PGRE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Headquartered in Boca Raton, FL, FlexShopper is a financial technology provider with a vast e-commerce presence. The Zacks Consensus Estimate for FPAY’s September-quarter bottom line indicates 140% year-over-year growth.
Based in Knoxville, TN, SmartFinancial is a leading financial services provider for individuals and corporate clients. The Zacks Consensus Estimate for SMBK’s 2022 earnings indicates 18% year-over-year growth.
New York-based Paramount Group works as a fully-integrated real estate investment trust. The Zacks Consensus Estimate for PGRE’s 2022 bottom line indicates 4.4% year-over-year growth.
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