Business Growth For The Quarter Ended 2020-12-31
The company reports a very significant amount of sales growth of 7% y/y with a gross profit ratio of 71%. Last year, annual sales were equal to $1501. 4 million. ECPG does not report huge EBITDA growth. In spite of that, the company’s EBITDA ratio is positive and equal to 54%. I feel that when more investors get to know the financial statistics of ECPG, the stock demand will increase. I also appreciate that net income grew a 26%.
Balance Sheet As Of 2020-12-31
With an assets to liabilities ratio of more than 1x, ECPG’s balance sheet looks stable. In Q4, the total amount of assets was equal to $4864 million, with total liabilities of $3644 million.
Money managers will perhaps carefully study ECPG’s financial obligations. ECPG’s short term debt is more significant than the cash in hand. I think that Encore Capital Group Inc may have to negotiate its debt soon. Moreover, the price to book value is below 1. 5x, which means that ECPG is undervalued. Encore Capital Group Inc has $4864 million in total assets, and $3644 million in total liabilities. ECPG’s debt to equity ratio is below 2x. All in all, the debt level appears to be under control. Note that Encore Capital Group Inc reports cash and cash equivalents of $189 million, and net debt of $2147 million. ECPG trades at 19x EBITDA, which may not seem cheap. In spite of that, with the company’s EBITDA margin of 54% the EV/EBITDA ratio makes sense.
Quarterly Results For The Quarter Ended 2020-12-31
In Q4 ECPG reported quarterly sales of $382 million, and gross profit of $271 million. The gross profit ratio was equal to 70%. Additionally, ECPG is profitable, which is positive. Encore Capital Group Inc released positive quarterly EBITDA of $210. 61 million. In my experience, when more investors get to know the financial statistics of ECPG, the stock demand will increase. ECPG also showed positive net income of $37. 32 million. I feel that when more investors get to know the financial statistics of ECPG, the stock demand will increase.
Valuation and Risks
I assume sales of $1501 million. So, ECPG trades at 1.4x forward sales. In my view, it can be justified due to the fact that Encore Capital Group Inc has decent margins. Institutional investors TRUIST FINANCIAL CORP, Freedman Financial Associates, Inc. , and UBS ASSET MANAGEMENT AMERICAS are Encore Capital Group Inc investors. The company shows a beta of 1. 67496. It is more very significant than 1, which means that the stock price can show huge volatility. ECPG’s stock price volatility is larger than that of the market. All in all, if you are not a volatility expert don’t trade Encore Capital Group Inc.
The following ECPG’s insiders acquired or sold equity recently.ECPG’s traders will most likely study this information:
+In 2021-03-11, officer: President, MCM Bell Ryan B sold equity of ECPG.
+In 2021-03-11, officer: President, MCM Bell Ryan B sold stock of ECPG.
+In 2021-03-11, officer: President, MCM Bell Ryan B acquired equity of ECPG.
Encore Capital Group, Inc. , a specialty finance company, together with its subsidiaries, provides debt recovery solutions and other related services for consumers across a range of financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery.
If you see an error, please contact the editor. We don’t own ECPG’s shares, and this is our opinion. We do not offer a recommendation to buy or sell any stock.