Recently, we reiterated our recommendation on
Portfolio Recovery Associates Inc.
) at Outperform, based on its improving operational results and
increasing financial strength.
Why the Retention?
Estimates for Portfolio Recovery have been steady since the
company reported its second-quarter 2013 results on Jul 30.
Earnings per share in the reported quarter stood at $2.56,
exceeding the Zacks Consensus Estimate by 14.3%. Portfolio
Recovery's revenues also surpassed the Zacks Consensus Estimate
by 4.6% and stood at $183 million.
Moreover, both earnings per share and revenues increased from the
year-ago results by 36.9% and 24.5%, respectively. The upsurge
resulted from strong cash collections fuelling top-line growth, a
diversifying product portfolio, strategic acquisitions and an
improving bottom line. These positives, in turn, reinforce the
long-term expansion plans of the company.
Following the release of the second-quarter results, the Zacks
Consensus Estimate for 2013 edged up 2.1% to $3.37 per share in
the last 60 days. Additionally, the Zacks Consensus Estimate for
2014 also inched up 2.7% to $3.84 a share. With the estimates for
both 2013 and 2014 showing slight upward pressure on the stock in
the near term, Portfolio Recovery now has a Zacks Rank #2 (Buy).
However, the Most Accurate Estimate for Portfolio Recovery's 2013
earnings stands at $3.32 per share, resulting in an Earnings ESP
Although rising expenses and intense competition deter the
desired upside in the stock, Portfolio Recovery's strong
fundamental growth stems from improved organic growth
initiatives. Moreover, prudent acquisitions, strong operating
cash flow and increased cash and cash equivalents have greatly
assisted the company's growth, thereby boosting investor
Other Financial Stocks that Warrant a Look
Along with Portfolio Recovery, other stocks in the financial
sector that are outperforming include
American Express Company
Everest Re Group Ltd.
Arch Capital Group Ltd.
). Both Everest Re Group and Arch Capital carry a Zacks Rank #1
(Strong Buy), whereas American Express carries a Zacks Rank #2
ARCH CAP GP LTD (ACGL): Free Stock Analysis
AMER EXPRESS CO (AXP): Free Stock Analysis
PORTFOLIO RCVRY (PRAA): Free Stock Analysis
EVEREST RE LTD (RE): Free Stock Analysis
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