Encore Capital Group, Inc. ECPG shares have plummeted 21.9% since it reported fourth-quarter 2024 results on Feb. 26, 2025. Investors might be concerned about falling debt-purchasing revenues in the quarter. However, rising collections and strong portfolio purchasing partially offset the negatives.
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ECPG reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.50, which missed the Zacks Consensus Estimate by 3.2%. The bottom line reported an improvement of 20% year over year.
ECPG's revenues declined 4.2% year over year to $265.6 million. Also, the top line missed the consensus mark by 28.9%.
Encore Capital Group Inc Price, Consensus and EPS Surprise
Encore Capital Group Inc Price, Consensus and EPS Surprise
Encore Capital Group Inc price-consensus-eps-surprise-chart | Encore Capital Group Inc Quote
Operational Update
Total debt purchasing revenues declined 4.6% year over year in the quarter under review to $240.9 million. Servicing revenues increased 4.5% in the fourth quarter of 2024 to $20.5 million and beat the consensus mark of $20 million.
Global collections grew 21% year over year to $554.6 million but missed the consensus mark of $585.5 million. Strong portfolio purchasing in the United States in the past couple of years and a stable collections environment in its key markets benefited the metric.
Total operating expenses of $399.8 million declined 19% year over year due to collection agency commissions and goodwill impairment.
Cash efficiency margin (cash receipts minus operating expenses minus impairment charges divided by cash receipts) increased to 53% in the second quarter from 51.2% a year ago.
Interest expenses increased 25.7% year over year to $68.5 million in the quarter under review. Encore Capital’s net loss of $225.3 million narrowed year over year.
Global portfolio purchases of $495.1 million rose from $292.5 million a year ago. It deployed $295.3 million in the United States and the rest in Europe.
Financial Position (as of Dec. 31, 2024)
Encore Capital exited the fourth quarter with total assets of $4.8 billion, higher than $4.6 billion at 2023-end. Cash and cash equivalents amounted to $199.9 million in the fourth quarter, higher than $158.4 million at 2023-end.
Borrowings increased from $3.32 billion at 2023-end to $3.67 billion. Total liabilities of $4 billion at the fourth-quarter end were higher than $3.69 billion at 2023-end. Total equity decreased from $936.5 million at 2023-end to $767.3 million.
Net cash provided by operating activities increased 2.1% year over year in 2024 to $156.2 million.
Full-Year Update
Revenues rose 8% year over year in 2024. Collections and portfolio purchases increased 16% and 26% year over year in 2024, respectively.
GAAP loss per share narrowed from $8.72 to $5.83 in 2024.
2025 Guidance
Management expects portfolio purchasing to surpass the 2024 figure of $1.35 billion in 2025 and collections to grow by around 11% to $2.4 billion in 2025.
Interest expenses are expected to be $285 million for 2024.
The company expects to resume share repurchases in 2025.
Zacks Rank
Encore Capital currently has a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Sector Players
Here are some other Finance sector players that have reported fourth-quarter results so far. The bottom-line results of Virtu Financial, Inc. VIRT, Synchrony Financial SYF and American Express Company AXP beat the respective Zacks Consensus Estimate.
Virtu Financial reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.14, which outpaced the Zacks Consensus Estimate by 32.6%. The bottom line recorded a more than four-fold increase year over year. Adjusted net trading income improved more than 75% year over year to $457.7 million. It beat the consensus estimate by 14.7%. Revenues from commissions, net and technology services amounted to $140.5 million, rising 22.8% year over year. Interest and dividend income of $123.8 million fell from $154.7 million a year ago.
Adjusted EBITDA jumped to $283.5 million from $99 million a year ago. Adjusted EBITDA margin of 57.5% improved 2,400 bps year over year. In the Market Making segment, adjusted net trading income was $347.9 million in the fourth quarter, up 107.7% year over year. The segment’s revenues rose 67.5% year over year to $706.5 million. The Execution Services unit recorded an adjusted net trading income of $109.8 million, which grew 17.6% year over year. Total revenues of $136.7 million grew 28.3% year over year.
Synchrony Financial reported fourth-quarter 2024 adjusted EPS of $1.91, which beat the Zacks Consensus Estimate of $1.90. The bottom line also increased from $1.03 per share a year ago. Net interest income improved 2.7% year over year to $4.6 billion. Retailer share arrangements of Synchrony increased 4.7% year over year to $919 million. Total loan receivables of SYF grew 2% year over year to $104.7 billion.
Total deposits were $82.1 billion, which rose 1.1% year over year but missed our estimate of $82.5 billion. Provision for credit losses decreased 13.5% year over year to $1.6 billion due to a reserve release. The purchase volume of Synchrony declined 3% year over year to $48 billion in the fourth quarter. Interest and fees on loans of $5.5 billion improved 2.9% year over year. Net interest margin deteriorated nine bps year over year to 15.01%. New accounts of 5 million slipped 19% year over year.
American Express reported fourth-quarter 2024 EPS of $3.04, which beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 16% year over year. Total revenues, net of interest expense, amounted to $17.2 billion, which also beat the consensus estimate by a whisker. The top line improved 8.7% year over year. Network volumes of $464 billion rose 7% year over year. Total interest income of $6.1 billion increased 9% year over year. Provision for credit losses declined 10% year over year to $1.3 billion.
The U.S. Consumer Services segment’s pre-tax income of $1.5 billion improved 5% year over year. Total revenues, net of interest expense, climbed 12% year over year to $8.3 billion. The Commercial Services segment recorded a pre-tax income of $814 million, which rose 22% year over year. Total revenues, net of interest expense, amounted to $4.1 billion, which grew 8% year over year. The International Card Services segment reported a pre-tax income of $34 million, which plunged 76% year over year.
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