PRA Group Pre-Q3 Earnings: Should You Buy the Stock Now?

Core Viewpoint - PRA Group, Inc. is expected to report strong year-over-year growth in earnings and revenues for Q3 2024, with earnings estimated at 34 cents per share and revenues at $264.48 million, reflecting a 209.7% and 22.2% increase respectively [1][2]. Financial Performance - The earnings estimate for Q3 has remained stable over the past 60 days, indicating confidence in the company's performance [2]. - For the current year, revenues are projected at $1.07 billion, representing a 33.8% year-over-year increase, while EPS is expected to reach $1.33, a jump of 162.4% [2]. Historical Performance - PRA Group has consistently beaten consensus earnings estimates in the past four quarters, with an average surprise of 299.4% [3]. Earnings Prediction - The current model does not predict an earnings beat for PRA Group this time, as the Earnings ESP is 0.00% and the Zacks Rank is 2 (Buy) [4]. Q3 Factors - Improved cash collections, higher portfolio income, and solid purchasing activity are expected to contribute positively to Q3 results, with total cash collections estimated to grow by 15.1% year-over-year [6]. - Portfolio income is projected at $218.3 million, indicating a 14.9% increase, while expected recoveries are estimated at $37 million, up 67% year-over-year [7]. Revenue Challenges - Other revenues are expected to decline by 46.2% year-over-year, with a consensus mark of $2.3 million [8]. Operating Expenses - Total operating expenses are anticipated to rise due to increased compensation, agency fees, and other costs, which may impact margins and earnings potential [9]. Stock Performance - PRA Group's stock has decreased by 23.7% year-to-date, underperforming the industry average increase of 9.2% and the S&P 500's rise of 22.2% [10]. Valuation - The company's current valuation is relatively low, trading at 10.54X forward 12-month earnings compared to the industry average of 15.04X, suggesting potential value for investors [12]. Investment Outlook - Rising portfolio income and improving cash collections may support top-line growth, while the focus on efficiency could enhance margins [14][15]. - Current shareholders may consider holding, while prospective investors might view this as a buying opportunity ahead of the upcoming earnings report [15].