When I last wrote about PRA Group (NASDAQ:PRAA),
I thought the shares of this leading debt collector where undervalued
on an intrinsic/fundamental basis, but that the company had a lot of
work to do to rebuild confidence and convince the Street that its issues
where primarily cyclical and not structural.
Although
the shares are up more than 10% in the year since, it has not been a
smooth ride – the company has seen a few sharp sell-offs after quarterly
earnings reports, including the roughly 25% drop that has followed the
latest second quarter report. Key metrics remain under pressure, and
while there are several positive drivers that argue for better results
in the future, the now-consistent inconsistency of results argues for a
healthy “margin of safety” discount. PRA Group shares continue to look
undervalued to me, but the company badly needs to start showing
improvements where it really counts.
Read more here:
PRA Group Has Cyclical Rebound Potential, But Execution Must Improve
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