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PRA Group's (PRAA) Q4 Earnings Top Estimates, Plunge Y/Y

Zacks Equity Research

PRA Group Inc.’s PRAA fourth-quarter 2018 earnings per share of 33 cents beat the Zacks Consensus Estimate by 22.2%, mainly attributable to revenue growth. However, the bottom line tumbled 81.6% year over year.

The company’s total revenues were $236 million, up 12.3% from the year-ago quarter. The top line also surpassed the Zacks Consensus Estimate by 3.5% on the back of its higher finance receivables.

It witnessed cash collection of $402.7 million, which was 7% above the 2017's fourth-quarter level.

Financial performance of the company was impacted by the Tax Cuts and Jobs Act.

PRA Group, Inc. Price, Consensus and EPS Surprise

PRA Group, Inc. Price, Consensus and EPS Surprise | PRA Group, Inc. Quote

Quarterly Operational Update

PRA Group’s fee income of $4.7 million decreased 22.5% year over year.

The company’s finance receivables during the reported quarter grew 14% year over year to $231 million, primarily owing to Americas Core portfolio investment during 2017 and 2018, Europe Core portfolio investment in 2017 and the yield increases in Europe Core.

Total operating expenses increased 21.7% year over year to $183.1 million. This deterioration was due to higher legal collection costs plus more compensation and employee services, attributable to certain expansions of the company.

In the quarter under review, the company reported cash collections of $402.7 million, up nearly 7% from the prior-year quarter, driven by growth in Americas Core and Europe Core.

Financial Update

As of Dec 31, 2018, the company has total assets of $3.9 billion, up 5.6% from the year-end 2017.

PRA Group exited the quarter with total equity of $1.1 billion, down 1.5 % from the level on Dec 31, 2017.

Cash and cash equivalents in the quarter under discussion were $98 million, down 18.1% from the year-end 2017.

In the quarter under consideration, borrowings increased 14% to $2.4 billion.

Full-Year Highlights

For 2019, total revenues were $9.1 billion, up 9.7% year over year. Earnings per share were $1.44, down 60% year over year.

Zacks Rank and Performance of Other Players

PRA Group has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other players from the finance sector, having reported fourth-quarter earnings so far, the bottom-line results of Synchrony Financial SYF, Intercontinental Exchange Inc. ICE and MarketAxess Holdings Inc. MKTX outpaced the respective Zacks Consensus Estimate.

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