PRA Group (PRAA) Up 4.2% Since Last Earnings Report: Can It Continue?

Core Viewpoint - PRA Group reported strong Q2 2024 earnings, significantly exceeding expectations, driven by improved cash collections and portfolio income, despite elevated expenses [2][3][5]. Financial Performance - Q2 2024 earnings per share were 54 cents, surpassing the Zacks Consensus Estimate of 5 cents, compared to a loss of 10 cents per share in the prior-year quarter [2]. - Total revenues increased by 35.8% year over year to $284.2 million, exceeding the consensus mark by 16% [2]. - Cash collections reached $473.9 million, up 13% year over year, and also surpassed the Zacks Consensus Estimate of $469.2 million [4]. - Portfolio income rose 13.6% year over year to $209.3 million, beating the consensus estimate of $205.8 million [4]. - Total operating expenses increased by 19.1% year over year to $195 million, driven by higher compensation, legal collection costs, and other operating expenses [5]. - Net income was $25.1 million, a nearly 22-fold increase year over year [5]. Operational Highlights - The company purchased nonperforming loan portfolios worth $379.4 million, reflecting a 15.7% year-over-year increase [5]. - Estimated remaining collections (ERC) stood at $6.8 billion at the end of Q2 2024 [5]. Financial Position - As of June 30, 2024, cash and cash equivalents were $118.9 million, a 5.6% increase from the end of 2023 [6]. - Total assets increased by 3% to $4.7 billion, while borrowings rose by 6.8% to $3.1 billion [6]. - Total equity decreased by 2.9% to $1.2 billion [6]. Guidance and Outlook - For 2024, the company anticipates solid portfolio investment levels and double-digit growth in cash collections [7]. - The effective tax rate is expected to be in the low to mid 20% range, with a cash efficiency ratio projected around 60% [8]. - The company expects to collect an ERC balance of $1.6 billion within the next 12 months [8]. Market Sentiment - Since the earnings release, there has been a 45.71% upward shift in consensus estimates [9]. - PRA Group holds a Zacks Rank 1 (Strong Buy), indicating expectations for above-average returns in the coming months [11].