Business has been improving for several quarters at PRA Group (PRAA), and a "perfect storm" (or at least a fortunate combination of events) in the second quarter catapulted some performance metrics even higher. While management themselves don't believe that the cash efficiency ratio seen in the second quarter is anything like a "new normal", the improved collections efficiency is very promising ahead of what I expect will be a surge in charged-off paper over the next couple of years.
I saw upside into the $40's when I last wrote about PRA Group, and here we are now in the mid-$40s. I can certainly see more upside from here, particularly as improved collections efficiency should be intersecting with improved supply. The boom time won't last forever, but PRA Group will have an opportunity to generate above-trend results for at least a little while. The only "but" is that the price today anticipates a lot of that.
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