Over the last 18 months, we have released a number of detailed research notes on two of our best short ideas: Encore Capital Group (ECPG) and PRA Group (PRAA). We will be hosting a conference call this Thursday, June 9, 2016 at 1 PM ET to explain our latest in-depth analysis on both companies.
Watch THE REPLAY BELOW
KEY POINTS
Encore Capital Group
- Recent & Significant Deterioration: The amount of collections relative to purchase price on recent vintages has fallen to all-time lows.
- Deteriorating Vintage-Level Operating Income: We use company data to approximate operating income at the vintage level. The results of which show the earnings power of the company is in real trouble.
- Would the Real Earnings Power Please Stand Up: The company’s results are not nearly as good as the company is suggesting.
- Into the Abyss: Our analysis finds persistently declining revenue and earnings going forward, while the Street has revenue and earnings per share growing every year through 2018.
PRA Group
- Deteriorating Recoveries: Similar to Encore, PRA's newer vintages’ cumulative collections as percentages of purchase prices are falling fast relative to older vintages.
- Negative Top-Line Growth: PRA is already exhibiting declining top line and earnings due to deteriorating collections performance.
- Allowance Albatross: Contrary to managment's assertion that Allowance charges are incidental, we've found that they're material and a hallmark of the late stage collapse in earnings power for this company.
CALL DETAILS
Toll Free Number:
Conference Code: 13638888#
Watch Live: CLICK HERE
Materials: CLICK HERE (Materials will be available approximately one hour prior to the start of the call)
Joshua Steiner, CFA
Jonathan Casteleyn, CFA, CMT
