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Pra Group Inc. (PRAA)
NASDAQ:PRAA

Pra Group (PRAA) AI Stock Analysis

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Pra Group

(NASDAQ:PRAA)

Rating:60Neutral
Price Target:
$16.00
▲(2.43%Upside)
PRA Group demonstrates strong revenue growth and operational performance, supported by a positive earnings call and strategic leadership transition. However, financial health is challenged by high leverage and liquidity constraints. The technical indicators suggest bearish momentum, but the stock's valuation could attract value investors. Addressing profitability and cash management is crucial for improving financial stability.
Positive Factors
Company Stability
The new CEO, Martin Sjolund, has extensive experience with the company, especially in European operations, suggesting continuity and stability.
Earnings Performance
PRA Group delivered another quarter of EPS and purchasing volume upside and refined the 2025 guidance metrics that raised purchasing and earnings outlook.
Leadership
The CEO transition follows a successful operational turnaround, indicating strong leadership and strategic direction.
Negative Factors
Consumer Finance Challenges
The company remains well-positioned relative to the broader consumer finance landscape based on a sweet spot in the purchasing and collections cycle characterized by elevated supply of charge-offs and excess funding.
Strategic Changes
Management indicates no significant changes are expected in execution and initiatives, implying consistency in strategy.

Pra Group (PRAA) vs. SPDR S&P 500 ETF (SPY)

Pra Group Business Overview & Revenue Model

Company DescriptionPRA Group, Inc., a financial and business services company, engages in the purchase, collection, and management of portfolios of nonperforming loans in the Americas, Australia, and Europe. It is involved in the purchase of accounts that are primarily the unpaid obligations of individuals owed to credit originators, which include banks and other types of consumer, retail, and auto finance companies. The company also acquires nonperforming loans, including Visa and MasterCard credit cards, private label and other credit cards, installment loans, lines of credit, deficiency balances of various types, legal judgments, and trade payables from banks, credit unions, consumer finance companies, retailers, utilities, automobile finance companies, and other credit originators. In addition, it provides fee-based services on class action claims recoveries and by servicing consumer bankruptcy accounts. The company was formerly known as Portfolio Recovery Associates, Inc. and changed its name to PRA Group, Inc. in October 2014. PRA Group, Inc. was incorporated in 1996 and is headquartered in Norfolk, Virginia.
How the Company Makes MoneyPRA Group generates revenue primarily through the acquisition and collection of nonperforming loan portfolios. The company purchases delinquent debt at a discount from face value and then employs a range of collection strategies to recover the outstanding amounts, thereby realizing a profit. Its revenue model is heavily reliant on its ability to accurately assess the value of debt portfolios and efficiently collect on them. Key revenue streams include collections on consumer debt, fees for contingent collections, and, to a lesser extent, interest income from finance receivables. The company’s earnings are significantly influenced by its operational efficiency, the quality of acquired debt portfolios, and economic factors affecting consumers' ability to repay debts.

Pra Group Earnings Call Summary

Earnings Call Date:May 05, 2025
(Q1-2025)
|
% Change Since: -18.65%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mix of strong operational performance with record ERC and cash collection growth. However, the company faced challenges with lower net income and cash collections below expectations in the U.S., despite overall positive trends in portfolio purchases and EBITDA growth.
Q1-2025 Updates
Positive Updates
Strong Portfolio Purchases
The company purchased $292 million of portfolios during the quarter, with $161 million in the U.S. and $113 million in Europe, reflecting strong buying and investment levels.
Record Estimated Remaining Collections (ERC)
The ERC grew to a record $7.8 billion at the end of the quarter, up 20% year-over-year and 5% sequentially.
Cash Collections Growth
Global cash collections were $497 million, up 11% from the prior year, with U.S. core cash collections up 20% year-over-year.
Adjusted EBITDA Growth
Trailing 12 months adjusted EBITDA grew by 13%, marking the seventh consecutive quarter of growth.
Improved Cash Efficiency
Cash efficiency ratio increased to 61%, up from 58% in the prior year period, reflecting operational improvements.
Negative Updates
Lower Net Income
Net income attributable to PRA was $4 million, or $0.09 in diluted earnings per share, lower than in recent quarters due to moderated changes in expected recoveries.
U.S. Cash Collections Below Expectations
U.S. core cash collections were 4% below expectations despite being up 20% year-over-year, attributed to a mismatch in modeled seasonality related to tax refunds.
Increased Operating Expenses
Operating expenses were $195 million, up 3% from the prior year, with legal collection costs increasing by $7 million.
Higher Net Interest Expense
Net interest expense increased by $9 million, reflecting higher debt balances due to increased portfolio investments.
Company Guidance
During the PRA Group's First Quarter 2025 Conference Call, several key metrics were highlighted, reflecting the company's strong financial performance and strategic progress. Portfolio purchases grew by 19%, with $292 million purchased during the quarter. The company achieved a record Estimated Remaining Collections (ERC) of $7.8 billion, marking a 20% year-over-year increase. Cash collections rose by 11% to $497 million, with U.S. core cash collections up 20%. The cash efficiency ratio improved by nearly 300 basis points to 61%. Adjusted EBITDA saw a 13% growth over the trailing 12 months, marking the seventh consecutive quarter of growth. The PRA Group's debt-to-adjusted EBITDA ratio stood at 2.93 times. Operating expenses were $195 million, up 3% from the prior year, while net income attributable to PRA was $4 million, yielding $0.09 in diluted earnings per share. Despite a moderated level of changes in expected recoveries, the company maintained profitability and continued to execute on its strategic pillars focusing on optimizing investments, operational execution, and managing expenses.

Pra Group Financial Statement Overview

Summary
PRA Group shows strong revenue growth and gross profit margins. However, profitability is hindered by high expenses and leverage, with a high debt-to-equity ratio. Cash flow challenges further highlight liquidity constraints, impacting financial stability.
Income Statement
65
Positive
The company shows a strong gross profit margin of 70.7% for TTM, indicating efficient cost management. However, the net profit margin is relatively low at 6.3%, suggesting potential challenges in controlling operating and other expenses. The revenue growth rate for TTM is significant at 37.9%, reflecting robust top-line expansion. Nevertheless, the net income has been volatile, with a shift from a loss in 2023 to a profit in the TTM period.
Balance Sheet
55
Neutral
The debt-to-equity ratio is high at 2.96 for TTM, indicating substantial leverage, which could pose financial risk. The return on equity is modest at 6.2%, reflecting challenges in generating profits from equity investment. The equity ratio stands at 23.0%, suggesting a moderate reliance on equity financing compared to total assets.
Cash Flow
40
Negative
The company faces challenges with negative free cash flow for TTM, indicating potential liquidity issues. The operating cash flow to net income ratio is negative, highlighting difficulties in converting profits into cash. The free cash flow to net income ratio is also negative, suggesting that cash outflows exceed inflows from operations.
BreakdownDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.12B815.50M968.75M1.10B1.07B
Gross Profit685.65M504.66M612.11M718.08M628.55M
EBITDA209.13M133.54M301.05M390.25M368.17M
Net Income70.60M-83.48M117.15M183.16M149.34M
Balance Sheet
Total Assets4.93B4.53B4.18B4.37B4.45B
Cash, Cash Equivalents and Short-Term Investments161.70M172.00M83.38M87.58M108.61M
Total Debt3.36B3.08B2.55B2.67B2.72B
Total Liabilities3.74B3.29B2.89B3.04B3.08B
Stockholders Equity1.14B1.17B1.23B1.29B1.34B
Cash Flow
Free Cash Flow-98.64M-100.42M8.34M73.71M124.47M
Operating Cash Flow-94.59M-97.53M21.59M84.92M141.70M
Investing Cash Flow-382.47M-234.86M120.45M160.38M115.00M
Financing Cash Flow488.44M355.30M-121.34M-262.81M-252.10M

Pra Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price15.62
Price Trends
50DMA
15.28
Positive
100DMA
17.72
Negative
200DMA
19.59
Negative
Market Momentum
MACD
0.06
Negative
RSI
57.38
Neutral
STOCH
70.11
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PRAA, the sentiment is Positive. The current price of 15.62 is above the 20-day moving average (MA) of 14.89, above the 50-day MA of 15.28, and below the 200-day MA of 19.59, indicating a neutral trend. The MACD of 0.06 indicates Negative momentum. The RSI at 57.38 is Neutral, neither overbought nor oversold. The STOCH value of 70.11 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PRAA.

Pra Group Risk Analysis

Pra Group disclosed 22 risk factors in its most recent earnings report. Pra Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Pra Group Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
$215.81M12.576.69%13.23%-47.36%
75
Outperform
$763.04M12.2310.84%8.14%14.79%
73
Outperform
$860.83M11.0222.68%15.21%20.25%
RMRM
72
Outperform
$326.79M10.009.51%3.76%6.57%44.84%
69
Neutral
$927.50M10.6920.78%-1.46%25.24%
61
Neutral
C$14.67B6.1420.17%5.70%26.93%-38.21%
60
Neutral
$609.95M8.606.03%23.90%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PRAA
Pra Group
15.62
-3.73
-19.28%
CPSS
Consumer Portfolio Services
10.01
0.53
5.59%
EZPW
EZCORP
14.03
4.04
40.44%
RM
Regional Management
32.94
6.58
24.96%
WRLD
World Acceptance
174.76
48.66
38.59%
ATLC
Atlanticus Holdings
57.64
26.82
87.02%

Pra Group Corporate Events

Executive/Board ChangesShareholder Meetings
PRA Group Appoints Martin Sjolund as CEO and Director
Neutral
Jun 24, 2025

On June 17, 2025, PRA Group, Inc. appointed Martin Sjolund as President and CEO, amending his Service Agreement to reflect his new role and increasing his compensation package. Concurrently, R. Owen James was promoted to President of PRA Group Europe, with an amended employment contract reflecting his new position and compensation. Additionally, the company’s Board of Directors appointed Sjolund as a director for a one-year term, and the 2025 Annual Meeting saw the election of directors and the ratification of Ernst & Young LLP as the independent auditor.

The most recent analyst rating on (PRAA) stock is a Buy with a $23.00 price target. To see the full list of analyst forecasts on Pra Group stock, see the PRAA Stock Forecast page.

Executive/Board ChangesBusiness Operations and StrategyFinancial Disclosures
PRA Group Reports Strong Q1 2025 Financial Results
Positive
May 5, 2025

On May 5, 2025, PRA Group reported its first quarter 2025 results, showcasing a 19% growth in portfolio purchases and a record estimated remaining collections of $7.8 billion. The company experienced double-digit cash collections growth and a 5.3% increase in net income year-over-year, positioning itself for continued success with the transition to a newly appointed CEO.

Executive/Board ChangesBusiness Operations and Strategy
PRA Group Announces New CEO Appointment
Positive
Apr 7, 2025

On April 2, 2025, PRA Group announced the retirement of Vikram A. Atal as President and CEO, effective June 17, 2025, following the company’s annual meeting. Martin Sjolund, who has been leading PRA Group Europe, will succeed Atal as President and CEO. This leadership transition is part of the company’s succession planning to ensure long-term, profitable growth. Atal will remain as a senior advisor until the end of 2025, and Glenn P. Marino will also retire from the Board following the annual meeting. Sjolund’s appointment is expected to further strengthen PRA Group’s global leadership position and create value for shareholders.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Jul 02, 2025