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PRA Group (PRAA) Up 3.7% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for PRA Group (PRAA). Shares have added about 3.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is PRA Group due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

PRA Group's Q3 Earnings Beat Estimates, Rise Y/Y

PRA Group’s third-quarter 2019 earnings per share of 55 cents beat the Zacks Consensus Estimate by 17%, mainly attributable to growth in revenues. Moreover, the bottom line increased 150% year over year.

Revenues totaled $250 million, up 10.6% from the year-ago quarter. However, the top line missed the Zacks Consensus Estimate by 2%.

The company witnessed cash collection of $453.2 million, which rose 16% from the figure reported in third-quarter 2018 on the back of increase in U.S. legal collections, Europe Core collections and U.S. call center and other cash collections.

Quarterly Operational Update

PRA Group’s fee income of $2.4 million decreased 6.6% year over year.
The company’s income recognized on finance receivables during the reported quarter grew 11% year over year to $247.5 million.

Total operating expenses increased 4.4% year over year to $181.2 million. The increase was due to higher legal collection fees, legal collection costs, agency fees, outside fees and services, communication, rent and occupancy and other operating expenses.

Business Update

The company spent $279 million on finance receivables in the quarter under review.

Financial Update

As of Sep 30, 2019, the company had total assets of $4.1 billion, up 5.3% from the level at 2018 end.

PRA Group exited the quarter with total equity of $1.1 billion, up 2% from the level on Dec 31, 2018.

Cash and cash equivalents in the quarter under discussion were $90 million, down 8.8% from the year-end 2018.

In the quarter under review, borrowings increased 3.8% to $2.6 billion from year-end 2018.
 

How Have Estimates Been Moving Since Then?

Estimates revision followed an upward path over the past two months.

VGM Scores

Currently, PRA Group has a great Growth Score of A, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

PRA Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.



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