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Pra Group Inc. (PRAA)
NASDAQ:PRAA
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Pra Group (PRAA) AI Stock Analysis

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PRAA

Pra Group

(NASDAQ:PRAA)

Rating:65Neutral
Price Target:
$17.50
▲(1.86% Upside)
Pra Group's overall stock score is driven by a positive earnings call and attractive valuation, indicating potential for future growth. However, financial performance is constrained by high leverage and cash flow issues, which dampen the overall score. Technical indicators show short-term bullish momentum, but long-term sentiment remains cautious.
Positive Factors
Earnings and Financial 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 and Management
The CEO transition follows a successful operational turnaround, indicating strong leadership and strategic direction.
Market Position
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.
Negative Factors
Strategic Consistency
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 collection of amounts owed on the non-performing loans it acquires. The company's revenue model is based on purchasing these debts at a discount and then working to collect the full amount from borrowers. This involves a combination of direct collections and negotiating settlements. PRA Group also earns income from various ancillary services related to debt recovery and asset management. Key revenue streams include collections on purchased portfolios, fees for servicing accounts, and interest income from payment plans. Additionally, strategic partnerships with financial institutions and credit agencies enhance its ability to acquire profitable portfolios and improve collection rates, further contributing to its earnings.

Pra Group Earnings Call Summary

Earnings Call Date:Aug 04, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Nov 03, 2025
Earnings Call Sentiment Positive
The earnings call reflected a positive outlook with strong performance in cash collections, record ERC, and gains from strategic sales. However, challenges remain with increased operating expenses and adjustments in expected recoveries.
Q2-2025 Updates
Positive Updates
Record ERC Achievement
The company grew its Estimated Remaining Collections (ERC) to a record of $8.3 billion at the end of Q2 2025, up 22% year-over-year and 6% sequentially.
Strong Cash Collections Growth
Cash collections for the quarter were $536 million, up 13% from the prior year period, driven by higher levels of recent portfolio purchases and investments in the U.S. legal channel.
Brazil Sale Generates Significant Gain
Completed the sale of equity interest in RCB in Brazil, generating a $30 million after-tax gain while maintaining portfolios and operations in the market.
Improved Legal Channel Performance
Q2 U.S. legal cash collections grew 24% year-over-year to $119 million, indicating strong performance from investments in the legal channel.
Reorganized U.S. Operations
Reorganized U.S. operations to create a more focused operational team, expected to result in more accountability and faster decision-making.
Negative Updates
Decline in Net Income Excluding One-Time Gain
Net income attributable to PRA was $42 million, but excluding the $30 million gain from the Brazil sale, net income was only $13 million.
Increased Operating Expenses
Operating expenses were $203 million, up 4% from the prior year period, driven by increases in professional and outside services expenses and legal collection costs.
Adjustment in Expected Recoveries
Made ERC adjustments in the U.S., with negative $7 million in changes in expected future recoveries primarily reflecting these adjustments.
Moderate Growth in Legal OpEx Expected
While legal OpEx growth was muted this quarter, it is expected to grow between 15% and 20% for the rest of 2025 due to strong buying environment in 2024.
Company Guidance
During the PRA Group's Q2 2025 conference call, the company provided key financial metrics and future guidance. They reported purchasing $347 million in portfolios, with $199 million in the Americas and $147 million in Europe, leading to an ERC record of $8.3 billion, up 22% year-over-year. The company achieved cash collections of $536 million, marking a 13% increase from the prior year. The U.S. legal cash collections grew by 24% year-over-year. Portfolio income rose by 20% to $251 million, driven by higher investment levels and purchase price multiples, which were 2.14x in the Americas and 1.82x in Europe. They expect to meet their 2025 purchase target of $1.2 billion and maintain a cash efficiency target of over 60%. The net leverage was reported at 2.81x, and they have ample funding capacity, with no debt maturities until 2027. The company is also focusing on restructuring U.S. operations, modernizing their IT platform, and reviewing overhead costs to improve efficiency and financial performance.

Pra Group Financial Statement Overview

Summary
Pra Group exhibits strong revenue growth and gross profit margins, but profitability is hindered by high expenses and leverage. The balance sheet shows significant debt levels, raising concerns about financial stability. Cash flow challenges further point to liquidity constraints. Overall, while there are growth opportunities, the company must address profitability and cash management to enhance financial health.
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue1.13B1.12B815.50M968.75M1.10B1.07B
Gross Profit932.91M685.65M504.66M612.11M718.08M628.55M
EBITDA163.40M209.13M133.54M301.05M390.25M368.17M
Net Income70.78M70.60M-83.48M117.15M183.16M149.34M
Balance Sheet
Total Assets5.15B4.93B4.53B4.18B4.37B4.45B
Cash, Cash Equivalents and Short-Term Investments189.32M161.70M172.00M83.38M87.58M108.61M
Total Debt30.88M3.36B3.08B2.55B2.67B2.72B
Total Liabilities3.87B3.74B3.29B2.89B3.04B3.08B
Stockholders Equity1.22B1.14B1.17B1.23B1.29B1.34B
Cash Flow
Free Cash Flow-78.63M-98.64M-100.42M8.34M73.71M124.47M
Operating Cash Flow-74.17M-94.59M-97.53M21.59M84.92M141.70M
Investing Cash Flow-422.07M-382.47M-234.86M120.45M160.38M115.00M
Financing Cash Flow523.64M488.44M355.30M-121.34M-262.81M-252.10M

Pra Group Technical Analysis

Technical Analysis Sentiment
Positive
Last Price17.18
Price Trends
50DMA
15.95
Positive
100DMA
15.74
Positive
200DMA
18.40
Negative
Market Momentum
MACD
0.35
Negative
RSI
58.66
Neutral
STOCH
59.57
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 17.18 is above the 20-day moving average (MA) of 16.54, above the 50-day MA of 15.95, and below the 200-day MA of 18.40, indicating a neutral trend. The MACD of 0.35 indicates Negative momentum. The RSI at 58.66 is Neutral, neither overbought nor oversold. The STOCH value of 59.57 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 (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$1.03B13.7010.95%8.31%23.50%
78
Outperform
$1.04B12.0922.83%19.27%34.76%
74
Outperform
$429.20M12.359.81%2.74%7.32%38.85%
69
Neutral
$957.15M11.8619.08%0.77%12.08%
68
Neutral
$18.05B11.7310.24%3.73%9.66%1.70%
65
Neutral
$662.69M7.317.38%18.67%2254.86%
62
Neutral
$164.46M9.236.66%16.13%-28.76%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
PRAA
Pra Group
17.18
-4.18
-19.57%
CPSS
Consumer Portfolio Services
7.74
-1.26
-14.00%
EZPW
EZCORP
16.90
5.37
46.57%
RM
Regional Management
43.80
14.24
48.17%
WRLD
World Acceptance
173.01
58.15
50.63%
ATLC
Atlanticus Holdings
67.84
36.46
116.19%

Pra Group Corporate Events

Business Operations and StrategyFinancial Disclosures
PRA Group Reports Strong Q2 2025 Financial Results
Positive
Aug 4, 2025

On August 4, 2025, PRA Group reported its financial results for the second quarter of 2025, highlighting a 96.9% increase in net income attributable to the company, reaching $42.4 million. The company achieved record estimated remaining collections of $8.3 billion, a 21.9% increase, and a 13.2% rise in total cash collections to $536.3 million. The results reflect strong portfolio purchases at attractive returns, with a focus on transforming its U.S. business and leveraging its European performance, indicating a positive trajectory for sustained shareholder value.

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.

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: Aug 19, 2025