Encore Capital (ECPG) AI Stock Analysis

• Market Cap: $895.21M
• Dividend Yield: N/A
• Average Volume (3M): 239.89K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.00
• Revenue Growth: 13.17%
• EPS Growth: 43.16%
• Country: US
• Employees: 7,350
• Sector: Financial
• Sector Strength: 75
• Industry: Financial - Mortgages
• EPS (TTM): 1.93
• Shares Outstanding: 23,349,200
• 10 Day Avg. Volume: 221,940
• 30 Day Avg. Volume: 239,891
• PEG Ratio: -0.47
• Price to Book (P/B): 1.12
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 7.39
• Enterprise Value/Market Cap: 0.79
• Enterprise Value/Revenue: 0.15
• Enterprise Value/Gross Profit: 1.15
• Enterprise Value/Ebitda: 0.62
• 1Y Price Target: $58.00
• Price Target Upside: 51.28% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

• Rating: 60 Neutral
• Price Target: $41.00 ▲(6.94%Upside)

Encore Capital's overall score is primarily influenced by its financial challenges, with negative profitability impacting valuation. However, recent earnings call highlights strong operational performance and strategic improvements in the U.S. market, providing a positive outlook. Technical analysis suggests a cautious stance, and while the credit facility expansion supports strategic goals, its effects are encapsulated in the earnings call analysis.

Positive Factors

Earnings

Encore Capital Group closed out 2024 with record collections and purchases in the fourth quarter, positioning the business as a cyclical winner.

Financial Performance

Strong full-year purchasing and collections guidance exceeded expectations, indicating robust financial performance.

Market Conditions

Management conveyed a robust purchasing environment in the U.S. market, with supply at record levels, and raised its purchasing outlook.

Negative Factors

Asset Impairment

Encore Capital Group reported a significant non-cash goodwill impairment at its European Cabot business.

Market Competition

The UK and European markets remain competitive, and pricing is not yet reflecting higher cost of capital.

One-Time Expenses

A variety of one-time expenses in the fourth quarter had a $262 million impact on results.

Encore Capital Business Overview & Revenue Model

Company Description

Encore Capital Group, Inc. (ECPG) is a global specialty finance company headquartered in San Diego, California. It operates primarily in the financial sector, focusing on the acquisition and management of charged-off consumer debt portfolios. Encore Capital purchases these portfolios at a discount from banks, credit unions, and other financial institutions, aiming to recover the outstanding amounts through its various collection strategies.

How the Company Makes Money

Encore Capital Group makes money by acquiring portfolios of charged-off consumer debts at a fraction of the face value and then collecting on these debts. The company utilizes a combination of proprietary data analytics, customer-centric collection strategies, and legal collection processes to recover as much of the outstanding debt as possible. Revenue is generated from the amounts collected on these portfolios, which are typically purchased at significantly discounted rates, allowing for substantial profit margins. Furthermore, Encore Capital Group operates internationally, which diversifies its revenue streams and allows it to leverage different market dynamics. Key factors contributing to its earnings include strategic partnerships with financial institutions from which it purchases debt, effective use of technology in its collection processes, and adherence to regulatory compliance across its operational jurisdictions.

Encore Capital Financial Statement Overview

Summary

Encore Capital's financial performance reflects challenges with profitability as indicated by negative net income and declining margins. However, the balance sheet is improving with a reduction in debt. Cash flow stability offers some reassurance, but revenue growth and profitability constraints need to be addressed.

Income Statement

The company has shown fluctuating revenue with a decline in recent years from 2020 to 2023, although a slight recovery is noted in 2024. Gross profit margin has decreased, indicating cost pressures. Net income has been negative for the past two years, signaling challenges in profitability. The EBIT margin is low, and the EBITDA margin turned negative in 2024, raising concerns about operational efficiency.

Balance Sheet

The balance sheet shows a moderate equity position with a debt-to-equity ratio improving due to the reduction of total debt to zero by 2024. However, the return on equity is negative in the last two years, highlighting profitability issues. The equity ratio has been stable, suggesting a balanced asset structure.

Cash Flow

Operating cash flow has been stable, but free cash flow growth is inconsistent. The operating cash flow to net income ratio is high due to negative net income, indicating issues with profit conversion. The free cash flow to net income ratio shows better performance, driven by effective capital expenditure management.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.32B	1.22B	1.40B	1.61B	1.50B
Gross Profit	893.45M	571.24M	769.70M	927.98M	834.40M
EBITDA	308.09M	63.35M	510.72M	683.35M	579.29M
Net Income	-139.24M	-206.49M	194.56M	350.78M	211.85M
Balance Sheet
Total Assets	4.79B	4.63B	4.51B	4.61B	4.86B
Cash, Cash Equivalents and Short-Term Investments	199.87M	158.36M	143.91M	189.65M	189.18M
Total Debt	3.67B	3.32B	3.98B	3.00B	3.28B
Total Liabilities	4.02B	3.69B	3.33B	3.42B	3.64B
Stockholders Equity	767.33M	936.54M	1.18B	1.19B	1.22B
Cash Flow
Free Cash Flow	127.16M	101.28M	173.46M	269.68M	278.26M
Operating Cash Flow	156.17M	152.99M	210.68M	303.05M	312.86M
Investing Cash Flow	-440.43M	-401.94M	-130.24M	339.90M	82.83M
Financing Cash Flow	317.77M	268.30M	-107.44M	-655.69M	-403.20M

Encore Capital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 38.34
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ECPG, the sentiment is Negative. The current price of 38.34 is below the 20-day moving average (MA) of 39.42, below the 50-day MA of 39.04, and below the 200-day MA of 42.12, indicating a bearish trend. The MACD of -0.07 indicates Positive momentum. The RSI at 45.55 is Neutral, neither overbought nor oversold. The STOCH value of 42.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ECPG.

Encore Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
VEL	68 Neutral	$638.60M	9.14	13.62%	―	32.62%	16.91%
Sector *	65 Neutral	£5.02B	10.34	6.93%	188.42%	24.07%	4.38%
WD	61 Neutral	$2.60B	26.20	5.62%	3.46%	6.68%	6.08%
ECPG	60 Neutral	$895.21M	―	-13.05%	―	13.17%	43.16%
GHLD	57 Neutral	$1.24B	28.59	3.71%	2.52%	42.92%	64.72%
PFSI	56 Neutral	$4.86B	13.05	10.05%	1.28%	23.65%	96.22%
LDI	48 Neutral	$587.24M	―	-29.48%	―	3.76%	16.19%

Encore Capital Corporate Events

Encore Capital Holds Annual Stockholders Meeting

Encore Capital held its Annual Meeting of Stockholders on June 6, 2025, where all nine directors were elected. Additionally, the compensation of the company’s named executive officers was approved, and BDO USA, P.C. was ratified as the independent registered public accounting firm for the fiscal year ending December 31, 2025.

The most recent analyst rating on (ECPG) stock is a Buy with a $64.00 price target. To see the full list of analyst forecasts on Encore Capital stock, see the ECPG Stock Forecast page.

Encore Capital Expands Credit Facility by $190 Million

On May 22, 2025, Encore Capital Group announced an amendment to its global senior secured revolving credit facility, increasing the facility size by $190 million to $1,485 million and extending its termination date to September 2029, except for a $69.5 million tranche that remains due in September 2028. This expansion and extension of the credit facility are likely to enhance the company’s financial flexibility and support its operational and strategic initiatives, potentially impacting its industry positioning and stakeholder interests positively.

The most recent analyst rating on (ECPG) stock is a Buy with a $61.00 price target. To see the full list of analyst forecasts on Encore Capital stock, see the ECPG Stock Forecast page.

Encore Capital Reports Strong Q1 2025 Financial Results

On May 7, 2025, Encore Capital Group, Inc. reported strong financial results for the first quarter of 2025, with a 24% increase in portfolio purchases and an 18% rise in collections compared to the same period in 2024. The company’s U.S. operations, particularly through its subsidiary MCM, showed significant growth with record portfolio purchases and collections, while its European arm, Cabot, also delivered solid performance despite challenges in the UK market. These results reflect Encore’s strategic focus on capitalizing on high-return opportunities in the U.S. and maintaining robust financial flexibility.