Instead, we thrive on steady portfolio sales over the credit cycle. Under this case scenario, I expect that Encore will maintain its relationships in the financial industry:įor this reason, we do not have to rely on large macroeconomic events that generate surges in NPL supply. That’s great because management does not have to rely on macroeconomic events or changing conditions to find opportunities in the loan market. Management has built relationships with large banks.
and the U.K., where well-known banks sell a significant number of nonperforming loans. The management knows exactly where to go to get a decent return on investments. In my view, management has a strategy, which has worked for many years. Source: Seeking Alpha Under Normal Circumstances, I Expect A Target Price Of $83 : Financial Data Forecasts Estimates and Expectations | ECPG | US2925541029 | MarketScreener In my view, this is the reason behind the recent repurchase of stock. It means that the current stock price is valued at 4x-6x EPS, which appears quite cheap. Under these figures, we would be talking about an EPS of $11-10.7. Market estimates include net sales of $1.619-$1.410 billion from 2021 to 2023, and positive net income of $337-$252 million. The median target price is around $70, which is way above the current market valuation. Besides, they all believe that the company is cheap at the current price mark. Most market analysts are quite optimistic about the future of Encore. As said earlier, it is a great time to review the company’s financial statements: In Europe, the United States, and other geographies, total collections increased by 13%. In the United States, in the nine months ended September 30, 2021, the company reported 11% more collections. The most recent information about 2021 appears to confirm that Encore is collecting more dollars. In light of these figures, I will be assuming that the company is collecting more cash from its NPLs, and using the cash to reduce its borrowings: Interestingly, in 2021, the company reported fewer borrowings and fewer investments in receivable portfolios. Source: Quarterly Report Solid Financial Situation, And More Collections In 2021 Than In 2020Īs of September 30, 2021, the company reported $3 billion in investment in receivable portfolios and borrowings worth $2.7 billion. In addition, in the last quarterly report, the company reported an acceleration in collections, and most analysts believe that FCF generation will continue in 2022, 2023, and 2024: They wouldn’t be buying $300 million in stock if financial advisors inside Encore believed that the shares are expensive. First, in my view, the Board of Directors believes that the shares are undervalued. I believe that it is the right time to study the company’s financial model. According to management, these impressive results are obtained thanks to proprietary models, extremely analytical approaches, and consumer-centric strategies: It is ranked as the first player in the U.S. Encore Is Reporting An Acceleration In CollectionsĮncore Capital is a debt buyer based in the United States. Under normal circumstances, I believe that the share price will trend north to $83. I expect that its proprietary models will continue to successfully make predictions from 2022 to 2025. Encore is the number one collector of dollars in the United States. I am talking about double-digit growth as compared to the same period in 2020. Encore Capital ( NASDAQ: ECPG) recently reported a significant acceleration in the collection of debt.
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