Thursday, August 9, 2018

Execution Can Drive More Upside From PRA Group

PRA Group (PRAA) has been a fairly weak performer on balance since the company last updated investors on its earnings. While the shares did stay above $40 for most of June and July, they’re more or less back where they were a quarter ago, trailing the S&P 500 but at least doing better than peer/rival Encore Capital (ECPG) over that time. Given where the company’s report was relative to analyst expectations, I’d say the expectations reset period is over, putting more pressure on management to deliver execution-driven upside.

I do believe management can do this, as the company still has a large number of relatively new employees that should become considerably more productive over the next few quarters. PRA Group is taking a more conservative stance toward Europe, which is likely a good move over the long term, and continuing to invest in business-building efforts with a long-term payoff, including more compliance and government relations work. I continue to believe that PRA shares can and should trade into the low-to-mid $40’s.

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Execution Can Drive More Upside From PRA Group

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