ECPG  Encore Capital Group Inc

Exchange

NASDAQ

Sector

Finance

Industry

Finance Companies

Market Cap.

980.58M

Vuru Grade

56.93/100

Current Price

$38.10
-0.40 (-1.04%)

Growth Price

$78.00
Undervalued by 104.71%

Company Metrics

  • P/E 13.58
  • P/S 0.98
  • P/B 1.65
  • EPS 2.81
  • Cash ROIC 3.45%
  • Cash Ratio -
  • Dividend 0 / N/A %
  • Avg. Vol. 330,997.00
  • Shares 25.74M
  • Market Cap. 980.58M

Company Description

Encore Capital Group, Inc., through its subsidiaries, engages in consumer debt buying and recovery business. The company purchases and manages portfolios of defaulted consumer receivables, which include consumers' unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies, commercial retailers, auto finance companies, and telecommunication compan... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

BRIEF-Encore Capital Group says unit Midland Funding won supreme court case
Reuters - May 16, 2017
May 16 Encore Capital Group Inc. * Encore Capital Group Inc says its subsidiary midland funding prevailed in case Midland Funding, LLC V. Johnson which was before supreme court of U.S.
Encore Capital Group's (ECPG) CEO Ken Vecchione on Q3 2016 Results - Earnings ...
Seeking Alpha - Nov 10, 2016
Good afternoon, and welcome to Encore Capital Group's third quarter 2016 earnings call. With me on the call today are Ken Vecchione, our President and Chief Executive Officer; Jonathan Clark, Executive Vice President and Chief Financial Officer; Ashish ...
Encore Capital Group's (ECPG) CEO Ken Vecchione on Q4 2016 Results - Earnings ...
Seeking Alpha - Feb 24, 2017
Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Encore Capital Group's Q4 2016 Earnings Conference.
Ashish Masih to Become President and CEO of Encore Capital Group
GlobeNewswire (press release) - May 4, 2017
SAN DIEGO, May 04, 2017 (GLOBE NEWSWIRE) -- Encore Capital Group (NASDAQ:ECPG) today announced that President and Chief Executive Officer (CEO) Ken Vecchione will be leaving the company to become the President of Western Alliance ...
Encore Capital Group Announces First Quarter 2017 Financial Results - Nasdaq
Encore Capital Group Inc (ECPG) Moves Lower on Volume Spike for May 04 - Equities.com
Encore Capital Group's (ECPG) CEO Ken Vecchione on Q2 2016 Results - Earnings ...
Seeking Alpha - Aug 7, 2016
Good day, ladies and gentlemen, and welcome to the Second Quarter 2016 Encore Capital Group Earnings Conference Call. At this time all participants are in a listen-only mode.
Encore Capital Group Teams Up Again With Habitat for Humanity
GlobeNewswire (press release) - Apr 21, 2017
SAN DIEGO, April 21, 2017 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ:ECPG), an international specialty finance company, today announced it will hold its fifth annual Global Volunteer Day on Saturday April 22, in San Diego, CA, Phoenix, ...
Encore Capital Group (ECPG) Earning Favorable Media Coverage, Report Finds - Sports Perspectives
Encore Capital Group: Management Hope Vs. Industry Reality
Seeking Alpha - Jan 11, 2017
Let's begin with a clear statement of our analysis. Based upon our view of the current debt purchasing market, we believe the shares of Encore Capital Group (ECPG) are significantly overvalued and estimate fair value of the shares to be $11 to $17 per ...
UPDATE – Encore Capital Group Enhances Credit Reporting Policy to Help Consumers
GlobeNewswire (press release) - Jan 10, 2017
SAN DIEGO, Jan. 10, 2017 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ:ECPG), an international specialty finance company, today announced it has enhanced its credit reporting policy for collections tradelines, dramatically shortening the ...
Encore Capital Group Achieves Prestigious International Standards Organization ...
GlobeNewswire (press release) - Feb 15, 2017
SAN DIEGO, Feb. 15, 2017 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ:ECPG), an international specialty finance company, today announced it has become ISO 27001:2013 certified as part of its continued efforts to protect consumer ...
Encore Capital Group, Inc. (ECPG) Now Covered by Keefe, Bruyette & Woods
Sports Perspectives - 9 hours ago
Encore Capital Group logo Equities research analysts at Keefe, Bruyette & Woods began coverage on shares of Encore Capital Group, Inc. (NASDAQ:ECPG) in a research report issued to clients and investors on Wednesday. The brokerage set an ...
Encore Capital Group Inc (ECPG) Breaks into New 52-Week High on May 25 Session - Equities.com
Encore Capital Group, Inc. (ECPG) Lifted to "Hold" at Zacks Investment Research - Markets Daily
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for ECPG to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate ECPG's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$38.10 Current Price

$78.00 Growth Price (DCF)

Undervalued by 104.71%


Growth Rate Assumed by Market: -24.54%


Future Free Cash Flow Growth Rate: 8.8%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$37.29 Book Price

Fairly valued


Poor Cash Return on Invested Capital over the past 5 years

ECPG has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

ECPG has only created $3.45 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20122013201420152016
Free Cash Flow 92.26M 61.35M 88.31M 85.78M 98.66M
divided by
Invested Capital 1.17B 2.69B 3.75B 4.22B 3.67B
Cash ROIC 7.88% 2.28% 2.35% 2.03% 2.69%

Shrinking Return on Equity over the past 5 years

ECPG has been shrinking returns with capital that shareholders have invested. This is a negative sign and demonstrates that both the business and management performance are weakening over time.

ECPG has generated $13.64 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20122013201420152016
Net Income 69.48M 75.30M 103.73M 45.14M 76.57M
divided by
Stockholders' Equity 405.82M 571.90M 623.00M 596.45M 559.30M
Return on Equity 17.12% 13.17% 16.65% 7.57% 13.69%

Excellent Business Performance over the past 10 years

ECPG has been able to maintain profitability in good times and bad. This could mean ECPG has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

ECPG has created positive free cash flow for 9 or more of the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Free Cash Flow 14.41M 60.80M 71.48M 70.73M 79.02M 92.26M 61.35M 88.31M 85.78M 98.66M

Weak Balance Sheet

ECPG's financial position is not ideal. The key is to check whether ECPG is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Cash - - - - - - - - - -
Current Assets - - - - - - - - - -
Total Assets 483.50M 549.30M 595.16M 736.47M 812.48M 1.17B 2.69B 3.75B 4.22B 3.67B
Current Liabilities - - - - - - - - - -
Total Liabilities 311.98M 353.41M 352.07M 433.77M 440.95M 765.52M 2.11B 3.13B 3.62B 3.11B
Stockholder' Equity 171.52M 195.89M 243.09M 302.70M 371.54M 405.82M 571.90M 623.00M 596.45M 559.30M
Current Ratio - - - - - - - - - -
TL-to-TA 0.65 0.64 0.59 0.59 0.54 0.65 0.79 0.83 0.86 0.85

Consistent Reinvestment of Profits over the past 10 years

ECPG has consistently retained profits. This may put ECPG in a strong position to invest for the future, by buying new machinery, investing in R&D or a number of other options. By effectively using these earnings, ECPG can greatly improve their long-term economic picture.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Retained Earnings 98.98M 117.81M 139.84M 188.89M 249.85M 319.33M 394.63M 498.35M 543.49M 560.57M
Retained Earnings Growth - 19.03% 18.70% 35.08% 32.27% 27.81% 23.58% 26.28% 9.06% 3.14%

Competitive Industry over the past 10 years

ECPG is likely operating in an industry with medium to low barriers to entry. This may mean that ECPG doesn't have a characteristic that's hard to replicate, such as exclusive distribution, branding or the ability to keep costs low. If Gross Margins are at least satisfactory, it's likely that ECPG invests heavily in R&D and Sales, General & Administrative expenses.

Only $9.29 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Net Income 15.04M 18.83M 33.05M 49.05M 60.96M 69.48M 75.30M 103.73M 45.14M 76.57M
divided by
Revenue 254.01M 255.89M 316.42M 381.31M 467.37M 555.87M 773.36M 1.07B 1.16B 1.03B
Net Profit Margin 5.92% 7.36% 10.44% 12.86% 13.04% 12.50% 9.74% 9.67% 3.89% 7.44%

Weak Pricing Power over the past 10 years

ECPG is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that ECPG has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $- of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Gross Profit - - - - - - - - - -
divided by
Revenue 254.01M 255.89M 316.42M 381.31M 467.37M 555.87M 773.36M 1.07B 1.16B 1.03B
Gross Margin - - - - - - - - - -

Low Capital Intensity over the past 10 years

ECPG has consistently used a small portion of their Net Income buying new equipment or investing in new facilities. This indicates that ECPG may require minimal investment to stay competitive. This leaves them with extra money to spend on growing their business and potentially buying back stock.

20.43% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Capital Expenditure 1.42M 2.28M 4.63M 2.72M 5.56M 6.27M 13.42M 23.24M 28.65M 31.67M
divided by
Net Income 15.04M 18.83M 33.05M 49.05M 60.96M 69.48M 75.30M 103.73M 45.14M 76.57M
Capital Expenditure Ratio 9.45% 12.08% 14.02% 5.55% 9.13% 9.02% 17.83% 22.40% 63.47% 41.36%

No Dividend History over the past 10 years

ECPG has never distributed dividends or has recently suspended their dividend distribution.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 23.39M 23.58M 24.08M 25.09M 25.69M 25.84M 26.20M 27.50M 26.65M 25.91M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 9.04 6.83 17.51 23.40 21.26 29.95 49.77 44.21 29.98 28.65
Dividend Yield - - - - - - - - - -

History of Stock Buybacks over the past 10 years

ECPG has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in USD. Fiscal year ends in December
2007200820092010201120122013201420152016
Shares Outstanding 23.39M 23.58M 24.08M 25.09M 25.69M 25.84M 26.20M 27.50M 26.65M 25.91M
Stock Bought Back - -0.81% -2.10% -4.02% -2.33% -0.57% -1.40% -4.70% 3.18% 2.85%
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