Encore Capital (ECPG) AI Stock Analysis

• Market Cap: $1.24B
• Dividend Yield: N/A
• Average Volume (3M): 320.48K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.82
• Revenue Growth: 10.85%
• EPS Growth: 77.59%
• Country: US
• Employees: 7,350
• Sector: Financial
• Sector Strength: 70
• Industry: Financial - Mortgages
• EPS (TTM): 3.17
• Shares Outstanding: 22,303,677
• 10 Day Avg. Volume: 301,060
• 30 Day Avg. Volume: 320,476
• PEG Ratio: 0.25
• Price to Book (P/B): 1.49
• Price to Sales (P/S): 0.87
• P/FCF Ratio: 8.97
• Enterprise Value/Market Cap: 3.80
• Enterprise Value/Revenue: 3.01
• Enterprise Value/Gross Profit: 4.94
• Enterprise Value/Ebitda: 14.07
• 1Y Price Target: $59.25
• Price Target Upside: 6.72% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 58 Neutral
• Price Target: $56.00 ▲(0.86% Upside)

The overall stock score of 58 reflects a company with strong technical momentum and positive earnings call sentiment, but significant financial performance and valuation concerns. The high leverage and negative profitability weigh heavily, while the technical analysis and earnings call provide some optimism for future performance.

Positive Factors

Revenue Growth

Positive revenue growth indicates a recovery from previous declines, suggesting a strengthening market position and potential for future expansion.

Strong U.S. Market Performance

The strong performance in the U.S. market, driven by effective operations and favorable conditions, underscores Encore's competitive advantage and growth potential.

Cash Flow Improvements

Improved cash generation enhances financial flexibility, allowing for strategic investments and debt management, supporting long-term stability.

Negative Factors

High Leverage

High leverage poses a risk to financial stability, limiting flexibility and increasing vulnerability to economic downturns.

Negative Profit Margins

Negative profit margins indicate challenges in profitability, which could hinder long-term growth and shareholder returns.

Increased Operating Expenses

Rising operating expenses may pressure margins and profitability, potentially impacting the company's ability to invest in growth initiatives.

Encore Capital Business Overview & Revenue Model

Company Description

Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services, as well as debt servicing and other portfolio management services to credit originator for non-performing loans. The company was incorporated in 1999 and is headquartered in San Diego, California.

How the Company Makes Money

Encore Capital generates revenue primarily through the acquisition and collection of distressed consumer debt. The company purchases portfolios of charged-off debt at a discount, allowing it to collect payments above the acquisition cost, which constitutes its main revenue stream. Additionally, Encore earns money through fees associated with debt collection services and may receive interest on payment plans established with consumers. The company also leverages data analytics to optimize its collections strategies, improving recovery rates and overall profitability. Key partnerships with credit agencies and financial institutions further enhance its ability to source portfolios, contributing to its earnings potential.

Encore Capital Financial Statement Overview

Summary

Encore Capital's financial statements present a challenging picture. While there is some revenue growth and strong gross margins, the company faces significant profitability issues with negative net income and high leverage. The cash flow situation shows improvement, but the reliance on debt and negative return on equity are major concerns. Overall, the company needs to address its profitability and leverage to improve its financial health.

Income Statement

Encore Capital's income statement shows a mixed performance. The TTM (Trailing-Twelve-Months) gross profit margin is strong at 68.14%, indicating efficient cost management. However, the net profit margin is negative at -6.07%, reflecting a net loss, which is a significant concern. Revenue growth is positive at 6.36% TTM, showing some recovery from previous declines. EBIT and EBITDA margins have decreased compared to historical performance, indicating pressure on operating profitability.

Balance Sheet

The balance sheet reveals high leverage with a debt-to-equity ratio of 4.13 TTM, which is risky and indicates potential financial instability. Return on equity is negative at -10.10% TTM, reflecting the company's inability to generate profits from shareholders' equity. The equity ratio is relatively low, suggesting a heavy reliance on debt financing.

Cash Flow

Cash flow analysis shows a positive trend with a 37.33% growth in free cash flow TTM, indicating improved cash generation. The operating cash flow to net income ratio is 0.58, suggesting that operating cash flows are not fully covering net losses. The free cash flow to net income ratio is 0.77, highlighting some efficiency in converting earnings into cash flow despite net losses.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.56B	1.32B	1.22B	1.40B	1.61B	1.50B
Gross Profit	951.58M	603.56M	571.24M	769.70M	927.98M	834.40M
EBITDA	334.43M	174.00M	63.35M	510.72M	656.27M	535.03M
Net Income	-45.13M	-139.24M	-206.49M	194.56M	350.78M	211.85M
Balance Sheet
Total Assets	5.26B	4.79B	4.63B	4.51B	4.61B	4.86B
Cash, Cash Equivalents and Short-Term Investments	172.49M	199.87M	158.36M	143.91M	189.65M	189.18M
Total Debt	3.93B	3.67B	3.32B	2.90B	3.00B	3.28B
Total Liabilities	4.31B	4.02B	3.69B	3.33B	3.42B	3.64B
Stockholders Equity	952.91M	767.33M	936.54M	1.18B	1.19B	1.22B
Cash Flow
Free Cash Flow	131.83M	127.16M	101.28M	134.12M	269.68M	278.26M
Operating Cash Flow	159.93M	156.17M	152.99M	210.68M	303.05M	312.86M
Investing Cash Flow	-480.27M	-440.43M	-401.94M	-130.24M	339.90M	82.83M
Financing Cash Flow	237.84M	317.77M	268.30M	-107.44M	-655.69M	-403.20M

Encore Capital Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 55.52
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 Positive. The current price of 55.52 is above the 20-day moving average (MA) of 54.01, above the 50-day MA of 49.06, and above the 200-day MA of 41.22, indicating a bullish trend. The MACD of 1.64 indicates Positive momentum. The RSI at 66.15 is Neutral, neither overbought nor oversold. The STOCH value of 63.24 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
PFSI	69 Neutral	$6.96B	14.42	12.55%	0.90%	25.42%	190.85%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
WD	67 Neutral	$2.08B	18.09	6.46%	4.42%	12.08%	20.13%
ECPG	58 Neutral	$1.24B	-30.38	-4.51%	―	10.85%	77.59%
LDI	47 Neutral	$706.46M	-5.75	-25.72%	―	3.91%	27.78%

Encore Capital Corporate Events

Encore Capital Reports Strong Q3 2025 Financial Growth

On November 5, 2025, Encore Capital Group, Inc. reported significant financial growth in the third quarter of 2025, with a 23% increase in portfolio purchases and a 20% rise in collections compared to the previous year. The company’s strategic focus on the U.S. market, where returns are highest, contributed to these results, and the implementation of new technologies and enhanced digital capabilities led to record collections. The company’s financial performance indicates a strong market position, with increased liquidity and no major debt maturities until 2028, which could positively impact stakeholders.

Encore Capital Issues $500M Senior Secured Notes

On October 1, 2025, Encore Capital Group issued $500 million in senior secured notes due 2031, with an interest rate of 6.625% per annum. The proceeds from this issuance were used to repay the company’s revolving credit facility and cover transaction-related expenses, impacting the company’s financial strategy by securing its debt obligations with its assets.

Encore Capital Announces $500M Senior Secured Notes Offering

On September 24, 2025, Encore Capital Group announced its intention to offer $500 million in senior secured notes due 2031, an increase from the initially planned $400 million, with an interest rate of 6.625% per annum. The proceeds are intended to repay the company’s revolving credit facility and cover transaction fees, impacting its financial operations by potentially improving liquidity and financial flexibility.