PRA Group (PRAA)
has been a frustrating stock to follow and own lately, as management’s
performance on margins has been underwhelming, while continuing to use
leverage to buy more charged-off debt. A still-healthy economy is
helping on the collections side, while rising charge-offs point to more
supply in the relatively near future.
I’m still
concerned about the possibility that there has been a permanent change
in PRA Group’s core market and that collections margins will never be
what they once were. Likewise, PRA’s sheer size is a limit to how much
cherry-picking the company can do when buying new inventory. I can still
argue for a price in the low $30’s, but I’m growing frustrated with the
slow pace of margin improvement and management’s credibility could use
some improvement.
Read more here:
PRA Group Doing Okay, But Needs To Find Another Gear
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