On Monday,
Portfolio Recovery Associates Inc.
(
PRAA
) announced the acquisition of Mackenzie Hall Holdings Ltd., a
Scotland-based debt purchase and collection company. Portfolio
Recovery paid approximately £33.5 million ($51.0 million) for the
purchase of 100% ownership stake in Mackenzie Hall. Additionally,
the company made long-term agreements to hire Mackenzie Hall's
management team, including the CEO.
Portfolio Recovery earns over 80% of its revenues from the
recovery of receivables. As Mackenzie Hall specializes in
collection of accounts receivables for its clients, which comprise
of banks, credit providers and debt purchasers, the company is
perfectly compatible with the operations of Portfolio Recovery.
The takeover is expected to boost Portfolio Recovery's revenues,
expand its geographic presence and increase its competitive
strength against peers such as
Asta Funding Inc.
(
ASFI
) and
Encore Capital Group Inc.
(
ECPG
). The company expects the acquisition to be accretive to its
earnings from the current quarter itself.
Over the past years, several significant acquisitions have
enabled Portfolio Recovery to expand beyond its primary debt
collection business into government collections and auditing, asset
recovery and monitoring and filing of class action claims. However,
the company does not depend solely on acquired units for
expansion. It has also been witnessing substantial organic
growth.
Earlier, in November 2011, Portfolio Recoveryannounced the
creation of a new subsidiary - PRA Professional Services, LLC, to
expand its audit and revenue recovery services for the private
sector. The new company was created as a wholly-owned subsidiary of
the group company and marked its initial foray into private sector
auditing.
The Zacks Consensus Estimate for Portfolio Recovery's fourth
quarter earnings stands at $1.52 per share, up 26% over the
year-ago quarter. The earnings for 2011 and 2012 are expected to be
$5.78 and $6.95, respectively.
Currently, Portfolio Recovery carries a Zacks #3 Rank, implying
a short-term 'Hold' rating. Based on the fundamentals, we maintain
our long-term 'Neutral' recommendation on the shares of the
company.
ASTA FUNDING (
ASFI
): Free Stock Analysis Report
ENCORE CAP GRP (
ECPG
): Free Stock Analysis Report
PORTFOLIO RCVRY (
PRAA
): Free Stock Analysis Report
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