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PRA Group Earnings Miss Estimates in Q4, Revenues Decline

PRA Group Inc . PRAA reported fourth-quarter 20Array5 earnings per share (EPS) of $Array.03 that missed the Zacks Consensus Estimate by a penny. However, the bottom line improved 6.2% from the year-ago quarter.

PRA Group's total revenue came in at $236.7 million, down 5.6% year over year due to lower income recognized on finance receivables, lower fee income and other income. Revenues also missed the Zacks Consensus Estimate of $238 million.

Cash collections increased 5% year over year to $380.3 million. Collections at America-Core's and Europe-Core increased 5.3% and Array5.0%, respectively. Collections at Europe-Insolvency were $2.5 million in the quarter. However, collections at America Insolvency plunged 28.4%.

Additionally, PRA Group's revenues from its finance receivables income came in at $208.5 million, down 6.4%. Fee income decreased Array4% to $Array9.6 million.

Operating expenses rose 8.4% year over year to $Array49.4 million. This was mainly due to higher compensation and employee services expenses, legal collection costs, agency fees as well as outside fees and services, rent and occupancy expenses.

Increased expenses and lower revenues resulted in operating income decline of 22.6% year over year. Subsequently, operating margin contracted 8Array0 basis points to 36.9%.

Full-Year Highlights

PRA Group earnings per share came in at $4.30 per share, up Array3.2% over 20Array4.

Revenues totaled $954.4 million, up 8.3% over 20Array4.

Balance Sheet and Capital Structure

As of Dec 3Array, 20Array5, PRA Group's cash and cash equivalents increased to $7Array.4 million from $39.7 million as of Dec 3Array, 20Array4. The company had $446.8 million outstanding under its line of credit as of Dec 3Array, 20Array5, substantially higher than $352.9 million as of Dec 3Array, 20Array4.

As of Dec 3Array, 20Array5, PRA Group's total assets were worth $2.99 billion, up from $2.78 billion as of Dec 3Array, 20Array4. Shareholders' equity was $800.5 million, down from $902.2 million as of Dec 3Array, 20Array4.

Acquisition Update

PRA Group acquired certain assets of Recovery Management Systems Corporation. While the buyout complements the insolvency business, it also braces up the bankruptcy processing services of PRA Group.

Performance of Other Stocks

The bottom line at American Express Company AXP and MasterCard Inc. MA beat their respective Zacks Consensus Estimate while the same at Discover Financial Services DFS missed our expectation in the fourth quarter.

Zacks Rank

PRA Group currently carries a Zacks Rank #5 (Strong Sell).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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