Encore Capital Group Earnings: Here’s Why Investors are Happy Now

Encore Capital Group, Inc. (NASDAQ:ECPG) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are up 4.44%.

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Encore Capital Group, Inc. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share increased 24.64% to $0.86 in the quarter versus EPS of $0.69 in the year-earlier quarter.

Revenue: Rose 10.81% to $144.3 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Encore Capital Group, Inc. reported adjusted EPS income of $0.86 per share. By that measure, the company beat the mean analyst estimate of $0.8. It missed the average revenue estimate of $150.53 million.

Quoting Management: “Encore delivered strong first quarter financial results with record collections, earnings and Adjusted EBITDA,” said Brandon Black, Encore’s Chief Executive Officer. “Our operating margin also continued to expand, as our cost-to-collect ratio declined to an all-time low of 36.5 percent. We have positioned our operations for the integration of Asset Acceptance, and are confident in the value that this acquisition will deliver for shareholders. Upon closing in June, we will have almost $3 billion in estimated remaining collections (AMEX:ERC). In addition to the $59 million we deployed in the first quarter on purchases, after closing, we will have the benefit of managing the $27 million that Asset Acceptance deployed in the first quarter. Our continued strong financial and operating performance is the direct result of the hard work and dedication of the entire Encore team.”

Key Stats (on next page)…

Revenue increased 0.48% from $143.61 million in the previous quarter. EPS increased 7.5% from $0.80 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.9 to a profit $0.88. For the current year, the average estimate has moved up from a profit of $3.52 to a profit of $3.53 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)