Encore Capital (ECPG) AI Stock Analysis

• Market Cap: $1.02B
• Dividend Yield: N/A
• Average Volume (3M): 331.06K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.03
• Revenue Growth: 17.57%
• EPS Growth: 55.46%
• Country: US
• Employees: 7,350
• Sector: Financial
• Sector Strength: 73
• Industry: Financial - Mortgages
• EPS (TTM): 2.49
• Shares Outstanding: 23,011,772
• 10 Day Avg. Volume: 369,544
• 30 Day Avg. Volume: 331,064
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 4.63
• Enterprise Value/Revenue: 3.21
• Enterprise Value/Gross Profit: 4.71
• Enterprise Value/Ebitda: 46.77
• 1Y Price Target: $57.67
• Price Target Upside: 30.45% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 3

• Rating: 56 Neutral
• Price Target: $41.00 ▼(-7.26% Downside)

The overall stock score of 56 reflects significant financial challenges, including high leverage and negative profitability, despite positive earnings call outcomes and technical indicators. The negative P/E ratio and lack of dividend yield further weigh on the score.

Positive Factors

Revenue Growth

Despite volatility, recent earnings call highlights a 20% increase in collections and a 32% increase in portfolio purchases, indicating potential for sustained revenue growth.

Improved Leverage

Improved leverage ratio suggests better financial management and reduced risk, enhancing the company's ability to invest in growth opportunities.

Credit Facility Expansion

The expanded credit facility enhances financial flexibility, supporting strategic initiatives and operational stability, which can strengthen market positioning.

Negative Factors

High Leverage

High leverage can limit financial flexibility and increase risk, potentially impacting the company's ability to navigate economic downturns or invest in growth.

Negative Profitability

Sustained negative profitability indicates operational inefficiencies and challenges in achieving cost-effective revenue generation, posing long-term financial risks.

Increased Operating Expenses

Rising operating expenses can erode profit margins and reduce cash flow, challenging the company's ability to maintain financial health and invest in future growth.

Encore Capital Business Overview & Revenue Model

Company Description

Encore Capital Group, Inc. (ECPG) is a leading international provider of debt recovery solutions, primarily operating in the financial services sector. The company specializes in purchasing and managing portfolios of distressed consumer debt, including credit card debt, personal loans, and other financial obligations. Encore Capital leverages advanced analytics and technology to optimize its collections process, offering comprehensive solutions that help consumers resolve their debts while maximizing recovery rates for creditors.

How the Company Makes Money

Encore Capital generates revenue primarily through the acquisition of distressed debt portfolios at a discount, which it then manages to recover the outstanding amounts owed. The company's key revenue streams include collections from charged-off consumer debts, fees from servicing third-party debt portfolios, and interest income from financing arrangements. Additionally, Encore Capital has established significant partnerships with various financial institutions and lenders, allowing it to access a diverse range of debt portfolios. The company's effective use of data analytics enhances its ability to determine the potential recovery value of debts, optimizing its purchasing strategy and collection efforts, thereby contributing to its overall profitability.

Encore Capital Financial Statement Overview

Summary

Encore Capital faces significant financial challenges with declining revenues, negative profitability, and high leverage. Despite maintaining positive operating cash flow, the high debt levels and negative net income indicate financial instability.

Income Statement

The company's income statement reflects a challenging environment with declining revenues and profitability. Gross profit margins have been decreasing, as seen in the TTM where the gross profit margin is 66.6%, down from the previous year. Net profit margins are negative, with a net loss in both TTM and last two annual reports, indicating ongoing profitability issues. Revenue growth has been volatile, with a TTM decline from the previous annual report. EBIT and EBITDA margins have also shown a downward trend, pointing towards operational inefficiencies.

Balance Sheet

Encore Capital's balance sheet indicates a high degree of leverage with a debt-to-equity ratio of approximately 4.6 in the TTM, though it has slightly improved over time. The equity ratio stands at 16.5% in the TTM, highlighting limited equity compared to the total assets. Return on equity is negative due to ongoing net losses, suggesting inefficiencies in generating returns on shareholders' equity. Despite high leverage, stability is maintained with a consistent level of total assets.

Cash Flow

The cash flow statement shows mixed results. Operating cash flow remains positive, but free cash flow has decreased slightly in the TTM. The free cash flow to net income ratio is unreliable due to negative net income, but operating cash flow covers net income losses, indicating some operational cash generation strength. The company appears to manage its capital expenditures effectively despite pressures on net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.47B	1.32B	1.22B	1.40B	1.61B	1.50B
Gross Profit	1000.00M	893.45M	571.24M	769.70M	927.98M	834.40M
EBITDA	100.60M	308.09M	63.35M	510.72M	683.35M	579.29M
Net Income	-89.15M	-139.24M	-206.49M	194.56M	350.78M	211.85M
Balance Sheet
Total Assets	5.19B	4.79B	4.63B	4.51B	4.61B	4.86B
Cash, Cash Equivalents and Short-Term Investments	172.90M	199.87M	158.36M	143.91M	189.65M	189.18M
Total Debt	0.00	3.67B	3.32B	3.98B	3.00B	3.28B
Total Liabilities	4.30B	4.02B	3.69B	3.33B	3.42B	3.64B
Stockholders Equity	895.97M	767.33M	936.54M	1.18B	1.19B	1.22B
Cash Flow
Free Cash Flow	95.99M	127.16M	101.28M	173.46M	269.68M	278.26M
Operating Cash Flow	124.28M	156.17M	152.99M	210.68M	303.05M	312.86M
Investing Cash Flow	-478.20M	-440.43M	-401.94M	-130.24M	339.90M	82.83M
Financing Cash Flow	265.51M	317.77M	268.30M	-107.44M	-655.69M	-403.20M

Encore Capital Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 44.21
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ECPG, the sentiment is Positive. The current price of 44.21 is above the 20-day moving average (MA) of 42.30, above the 50-day MA of 40.32, and above the 200-day MA of 41.12, indicating a bullish trend. The MACD of 1.15 indicates Negative momentum. The RSI at 63.09 is Neutral, neither overbought nor oversold. The STOCH value of 69.35 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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	$719.57M	8.57	15.02%	―	35.12%	25.28%
Sector *	68 Neutral	$18.02B	11.58	9.93%	3.75%	9.73%	1.23%
WD	66 Neutral	$2.93B	26.52	6.26%	3.09%	11.18%	24.94%
PFSI	64 Neutral	$6.44B	17.26	10.05%	0.96%	20.77%	96.22%
LDI	61 Neutral	$1.41B	―	-23.67%	―	6.60%	44.77%
GHLD	58 Neutral	$1.24B	51.13	2.12%	2.49%	34.62%	-7.94%
ECPG	56 Neutral	$1.02B	―	-9.46%	―	17.57%	55.46%

Encore Capital Corporate Events

Encore Capital Reports Strong Q2 2025 Financial Results

On August 6, 2025, Encore Capital Group, Inc. reported strong financial results for the second quarter of 2025, with significant growth in portfolio purchases, collections, and earnings per share compared to the previous year. The company achieved record portfolio purchases and collections in the U.S., driven by robust portfolio supply and strong execution, while its European operations also delivered solid performance despite market challenges. These results highlight Encore’s strategic focus on maximizing returns and maintaining a competitive advantage in the debt purchasing market.

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.