Recently, the board of
Encore Capital Group Inc.
) has authorized a new share repurchase program, under which the
company can spend up to $50 million for share buybacks. The
authorization is expected to be fully utilized by the end of
According to the new buyback plan, the shares can be
repurchased from the open market, through private or block
transactions or using any other buyback process. However, the
buyback is dependent on market conditions, business-related
concerns as well as appropriate regulations.
The new repurchase program is consistent with Encore Capital's
policy of maximizing returns to shareholders through efficient
deployment of capital. The company's strong financial results and
impressive asset position allow it to utilize market conditions
to enhance shareholders' returns.
Encore Capital's ability to invest in market opportunities to
boost shareholder value has been further enhanced by its new
credit facility that has augmented the company's borrowing
capacity. Last week, the company announced the amendment of its
old $555.5 million revolving credit facility, which was set to
expire by the end of 2013.
The amended facility comprises a $425 million revolving credit
facility valid for 5 years along with a $100 million term note
due in November 2017 and a $50 million term note due in November
2015. Moreover, Encore Capital has the option of increasing the
borrowing limit by $200 million using the accordion feature of
credit facility. Thus, the company has ample financial
flexibility to engage in share repurchases.
Encore Capital's peer in the receivables management and
recovery business -
Portfolio Recovery Associates Inc.
) - also engages in share repurchases to boost shareholder value.
The company had authorized a $100 million share repurchase
program in February this year. Consequently, the company
repurchased 331,449 shares at an average price of $68.56 during
the first nine months of 2012.
Encore Capital currently carries a Zacks #3 Rank (short-term
Hold). We have a long-term 'Neutral' recommendation on the
ENCORE CAP GRP (ECPG): Free Stock Analysis
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
To read this article on Zacks.com click here.