ECPG  Encore Capital Group Inc

Exchange

NASDAQ

Sector

Finance

Industry

Finance Companies

Market Cap.

899.59M

Vuru Grade

56.71/100

Current Price

$35.15
+0.60 (+1.74%)

Growth Price

$51.06
Undervalued by 45.27%

Company Metrics

  • P/E 11.88
  • P/S 0.86
  • P/B 1.58
  • EPS 2.96
  • Cash ROIC 4.85%
  • Cash Ratio -
  • Dividend 0 / N/A %
  • Avg. Vol. 302,450.00
  • Shares 25.59M
  • Market Cap. 899.59M

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

Analyst Downgrades – Encore Capital Group (NASDAQ:ECPG) Stock Gets Downgraded ...
Market Exclusive - Feb 24, 2017
Encore Capital Group, Inc., through its subsidiaries, is a specialty finance company providing debt recovery solutions for consumers and property owners across a range of financial assets.
Encore Capital Group Inc (ECPG) Moves Higher on Volume Spike for February 24 - Equities.com
Encore Capital Group beats Street 4Q forecasts - Yahoo Finance
Encore Capital Group Inc (ECPG) Breaks into New 52-Week High on February 24 ...
Equities.com - Feb 24, 2017
Shares of Encore Capital Group Inc (ECPG) broke into a new 52-week high yesterday, hitting a peak of $35.93. Shares closed at $35.15 after opening at $31.30 for a move of 1.74%.
Encore Capital Group to Announce Fourth Quarter 2016 Financial Results on ...
Yahoo Finance - Feb 14, 2017
14, 2017 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (ECPG), an international specialty finance company, announced today that it will release its financial results for the fourth quarter of 2016 on Thursday, February 23, 2017, after the market closes.
Encore Capital Group Achieves Prestigious International Standards Organization ... - GlobeNewswire (press release)
Encore Capital Group Inc (ECPG) Breaks into New 52-Week High on February 15 ... - Equities.com
Encore Capital Group (ECPG) Enters Overbought Territory February 17, 2017
Zacks.com - Feb 17, 2017
If this wasn't enough, Encore Capital Group also has a Zacks Rank #4 (Sell)which puts it into unfortunate company among its peers. So, given all of these factors, investors may want to consider exiting this stock now before it falls back to Earth. You ...
Comparison Of Debt Collectors Encore Capital Group And Portfolio Recovery ...
Seeking Alpha - Nov 23, 2015
Do not let the nice numbers from Encore Capital Group Inc. fool you, it is like walking in a flowery mine field. Portfolio Recovery Associates Inc. has great fundamentals, earnings growth by 20% a year and the numbers are consistent.
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 ...
Encore Capital Group Inc (ECPG) Breaks into New 52-Week High on February 08 ...
Equities.com - Feb 8, 2017
Shares of Encore Capital Group Inc (ECPG) broke into a new 52-week high yesterday, hitting a peak of $33.20. Shares closed at $32.95 after opening at $32.70 for a move of 0.15%.
The Encore Capital Group Inc (ECPG) Receives $25.50 Consensus PT from Analysts - DailyQuint
Encore Capital Group to Speak at DBA International 20th Anniversary Conference
Yahoo Finance - Jan 30, 2017
30, 2017 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (ECPG), an international specialty finance company, announced that Vice President and Chief Compliance Officer Doris Hektor and Division General Counsel of Atlantic Credit & Finance, Inc., Kevin ...
Encore Capital Group Inc (ECPG) Breaks into New 52-Week High on February 13 ...
Equities.com - Feb 13, 2017
Shares of Encore Capital Group Inc (ECPG) broke into a new 52-week high yesterday, hitting a peak of $33.80. Shares closed at $33.40 after opening at $33.20 for a move of 1.21%.
Encore Capital Group Inc (ECPG) Breaks into New 52-Week High on January 26 Session
Equities.com - Jan 26, 2017
Shares of Encore Capital Group Inc (ECPG) broke into a new 52-week high yesterday, hitting a peak of $31.50. Shares closed at $30.70 after opening at $30.95 for a move of -0.65%.
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.

$35.15 Current Price

$51.06 Growth Price (DCF)

Undervalued by 45.27%


Growth Rate Assumed by Market: -15.38%


Future Free Cash Flow Growth Rate: 7.0%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$38.70 Book Price

Undervalued by 10.09%


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 $4.85 of cash for every $100 invested.
Figures in USD. Fiscal year ends in December
20112012201320142015
Free Cash Flow 79.02M 92.26M 61.35M 88.31M 85.78M
divided by
Invested Capital 812.48M 1.17B 2.69B 3.75B 4.22B
Cash ROIC 9.73% 7.88% 2.28% 2.35% 2.03%

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 $14.18 of Earnings for every $100 of Shareholders' Equity.
Figures in USD. Fiscal year ends in December
20112012201320142015
Net Income 60.96M 69.48M 75.30M 103.73M 45.14M
divided by
Stockholders' Equity 371.54M 405.82M 571.90M 623.00M 596.45M
Return on Equity 16.41% 17.12% 13.17% 16.65% 7.57%

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
2006200720082009201020112012201320142015
Free Cash Flow 35.60M 14.41M 60.80M 71.48M 70.73M 79.02M 92.26M 61.35M 88.31M 85.78M

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
2006200720082009201020112012201320142015
Cash - - - - - - - - - -
Current Assets - - - - - - - - - -
Total Assets 395.34M 483.50M 549.30M 595.16M 736.47M 812.48M 1.17B 2.69B 3.75B 4.22B
Current Liabilities - - - - - - - - - -
Total Liabilities 244.20M 311.98M 353.41M 352.07M 433.77M 440.95M 765.52M 2.11B 3.13B 3.62B
Stockholder' Equity 151.14M 171.52M 195.89M 243.09M 302.70M 371.54M 405.82M 571.90M 623.00M 596.45M
Current Ratio - - - - - - - - - -
TL-to-TA 0.62 0.65 0.64 0.59 0.59 0.54 0.65 0.79 0.83 0.86

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
2006200720082009201020112012201320142015
Retained Earnings 83.93M 98.98M 117.81M 139.84M 188.89M 249.85M 319.33M 394.63M 498.35M 543.49M
Retained Earnings Growth - 17.92% 19.03% 18.70% 35.08% 32.27% 27.81% 23.58% 26.28% 9.06%

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 $9.48 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in USD. Fiscal year ends in December
2006200720082009201020112012201320142015
Net Income 24.01M 15.04M 18.83M 33.05M 49.05M 60.96M 69.48M 75.30M 103.73M 45.14M
divided by
Revenue 255.14M 254.01M 255.89M 316.42M 381.31M 467.37M 555.87M 773.36M 1.07B 1.16B
Net Profit Margin 9.41% 5.92% 7.36% 10.44% 12.86% 13.04% 12.50% 9.74% 9.67% 3.89%

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
2006200720082009201020112012201320142015
Gross Profit - - - - - - - - - -
divided by
Revenue 255.14M 254.01M 255.89M 316.42M 381.31M 467.37M 555.87M 773.36M 1.07B 1.16B
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.

17.31% 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
2006200720082009201020112012201320142015
Capital Expenditure 2.43M 1.42M 2.28M 4.63M 2.72M 5.56M 6.27M 13.42M 23.24M 28.65M
divided by
Net Income 24.01M 15.04M 18.83M 33.05M 49.05M 60.96M 69.48M 75.30M 103.73M 45.14M
Capital Expenditure Ratio 10.12% 9.45% 12.08% 14.02% 5.55% 9.13% 9.02% 17.83% 22.40% 63.47%

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
2006200720082009201020112012201320142015
Dividend Paid - - - - - - - - - -
divided by
Shares Outstanding 23.39M 23.39M 23.58M 24.08M 25.09M 25.69M 25.84M 26.20M 27.50M 26.65M
Dividend Paid Per Share - - - - - - - - - -
Price at Year End 12.60 9.04 6.83 17.51 23.40 21.26 29.95 49.77 44.21 29.98
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
2006200720082009201020112012201320142015
Shares Outstanding 23.39M 23.39M 23.58M 24.08M 25.09M 25.69M 25.84M 26.20M 27.50M 26.65M
Stock Bought Back - 0.02% -0.81% -2.10% -4.02% -2.33% -0.57% -1.40% -4.70% 3.18%
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