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Why Is PRA Group (PRAA) Up 50.6% Since Last Earnings Report?

·3 min read

A month has gone by since the last earnings report for PRA Group (PRAA). Shares have added about 50.6% 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 the most recent earnings report in order to get a better handle on the important catalysts.

PRA Group Q1 Earnings and Revenues Beat Estimates

PRA Group first-quarter 2020 earnings per share of 42 cents beat the Zacks Consensus Estimate by 35.5%. Moreover, the bottom line improved 23.5% year over year, primarily due to improved top-line growth.

Revenues of $252 million were up 2.4% from the year-ago quarter, courtesy of high portfolio income. Further, the top line beat the Zacks Consensus Estimate by 2.5%.

The company’s cash collection of $494.6 million climbed 7.2% from the figure reported in the first quarter on the back of higher contributions by Americas Core, Europe Core and Europe Insolvency.

Quarterly Operational Update

PRA Group’s fee income of $2.2 million plunged 65.3% year over year. The company’s portfolio income came in at $262 million in the quarter under review, which compares favorably with income recognized on finance receivables of $238.8 million in the prior-year quarter.

Total operating expenses inched up 0.2% over year to $191.2 million, mainly on account of higher legal collection fees, outside fees and services, communication, rent and occupancy and other operating expenses.

Business Update

The company spent $273.2 million on finance receivables in the quarter under review.

Financial Update

As of Mar 31, 2020, the company had total assets of $4.4 billion, down 1.7% from the level at 2019 end. PRA Group exited the quarter with total equity of $1.1 billion, down 8.7% from the level on Dec 31, 2019.

Cash and cash equivalents in the quarter under discussion were $180 million, up 50.3% from the level at 2019 end.

In the quarter under review, borrowings inched up 0.7% to $2.8 billion from the number at 2019 end.
 

How Have Estimates Been Moving Since Then?

Estimates revision followed a flat path over the past two months. The consensus estimate has shifted 56.11% due to these changes.

VGM Scores

At this time, PRA Group has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, 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 #3 (Hold). We expect an in-line return from the stock in the next few months.


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