Encore Capital Group Inc.
) reported fourth-quarter 2013 operating earnings of $1.01 per
share, which surpassed the Zacks Consensus Estimate of 99 cents
by 2%. The results also improved significantly by 26.3% from the
prior-year quarter's 80 cents.
Encore Capital reported net income of 87 cents per share in
the fourth quarter of 2013, up from 79 cents in the fourth
quarter of 2012. The figure included the impact of convertible
notes non-cash interest and issuance cost amortization of 4 cents
per share and acquisition related legal and advisory fees of 10
cents per share.
Total revenue at Encore Capital increased 64.8% year over year
to nearly $237.1 million. However, the top line lagged the Zacks
Consensus Estimate of $240 million. Year-over-year growth in
sales was fueled by significantly higher revenues from receivable
portfolio as well as improvement in other revenues during the
Gross collections of $351.3 million from the purchasing and
recovery business escalated 52% year over year.
Total operating expenses of $168.5 million shot up 62.2% year
over year from $103.9 million. Rise in expenses resulted from
higher salaries and employee benefits, cost of legal collections,
other operating expenses, collection agency commissions and
higher general and administrative expenses. Adjusted operating
expenses decreased to 42.1% compared with 42.8% in the prior-year
Encore Capital's fourth-quarter adjusted earnings before
interest, taxes, depreciation and amortization (EBITDA) grew 53%
year over year to $205.96 million.
Encore Capital reported full-year 2013 operating earnings of
$3.77 per share, which surpassed the Zacks Consensus Estimate of
$3.74. The results also improved from the prior-year quarter
number of $3.15 per share.
For full-year 2013, Encore Capital reported net income of
$2.94, down from $3.04 in 2012. The figure included the impact of
convertible notes non-cash interest and issuance cost
amortization of 12 cents per share, acquisition related legal and
advisory fees of 50 cents per share, acquisition related
integration and severance costs and consulting fees of 13 cents
per share and acquisition related other expenses of 8 cents per
share in 2013.
For full-year 2013, total revenue of Encore Capital increased
38.9% year over year to nearly $773.4 million.
Gross collections increased 35% year over year to $1.28
billion in 2013.
As of Dec 31, 2013 total assets of Encore Capital stood at
$2.7 billion compared with $1.17 billion at 2012-end.
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As of Dec 31, 2013, Encore Capital's cash and cash equivalents
surged significantly to $126.2 million from $17.5 million as of
Dec 31, 2012.
Investment in Receivable portfolio totaled $1.6 million at
end-2013, compared with $873.1 million at end-2012.
Total debt amounted to $1.9 billion, up from $706 million at
As of Dec 31, 2013, total shareholders' equity was $575.9
million, up 41.9% from $405.8 million at 2012-end.
Encore Capital's fourth-quarter earnings surpassed the Zacks
Consensus Estimate as well as the year-ago numbers. The company's
strong focus on growth initiatives are impressive and enhance
shareholders value. The company's cash position also remained
strong at the end of 2013, which is expected to help the company
invest in more such growth boosting initiatives.
Encore Capital has been actively expanding its global footprint
through acquisitions in the U.K. and Latin America. Recently, the
company acquired Peru and Columbia based specialty loan servicer,
Refinancia. This buyout is in conformity to the Latin American
expansion of the company and is expected to help Encore Capital
generate higher returns. Further, the company is set to acquire
the U.K.-based fund management firm, Grove Capital Management. On
culmination (expected late in the first quarter or early in the
second quarter of 20104), this deal is expected to help Encore
Capital increase its portfolio of services and cater to the
issuers in the U.K.. We believe all these endeavors are on the
right track to drive growth for Encore capital. The long-term
growth rate of the company is 14.7%.
Performances by Others
Discover Financial Services
) reported fourth-quarter 2013 earnings per share (EPS) of $1.23,
which exceeded the Zacks Consensus Estimate of $1.17 per share.
Fall in interest earnings assets affected
Capital One Financial Corp.
) fourth-quarter earnings of $1.45 per share, which missed the
Zacks Consensus Estimate by 5.8%.
) fourth-quarter 2013 core earnings were 61 cents per share,
falling short of the Zacks Consensus Estimate of 70 cents.
Encore Capital presently carries a Zacks Rank #3 (Hold).
Investors interested in the financial services space may also
consider better-ranked stock, Discover with a Zacks Rank #2