Why should you have PRA Group (PRAA) in your portfolio?


PRA Group Inc. PRAA was favored by investors because of its operational efficiency, strategic measures and better cash flow.

The company posts a surprisingly impressive earnings record, beating earnings for the past four quarters. He has a surprise profit for the last four quarters of 41.67% on average.

The stock currently has a Zacks Rank # 3 (Hold) and VGM score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of the three factors. You can see The full list of today’s Zacks # 1 Rank (Strong Buy) stocks here.

Let’s take a look at the factors that make this stock a must-have choice for investors right now.

The company has actively worked to improve its cash flow efficiency ratio, supported by its operational efficiency. The PRA Group had excellent cash flow in the last quarter of 2020, which is the highest by a usual fourth quarter reading.

One of its main revenue drivers, receivables income has been increasing since 2009, with the exception of 2016. The company’s total revenue grew 4.8% year-on-year. more in 2020. Its strong capital position makes it optimistic about an increase in purchasing volume for next year. In addition, the company has approximately $ 1 billion in cash for investment purposes. Given its strong fundamentals, we expect this uptrend to likely benefit its sales going forward.

PRA Group has taken certain initiatives to expand its presence beyond primary debt collection. He has successfully penetrated government audit departments and collection firms.

The company acquired the holding company of the Canadian operations of Resurgent Holdings LLC in March 2019, which helped it build an advanced NPL business in the country. In 2020, he spent $ 905.1 million on portfolio acquisitions. All of these movements bode well for the inorganic growth of the company.

Its inflow grew 7.4% and 13.3% year-over-year in 2018 and 2019, respectively. This upward trend continued into 2020, with total cash collections increasing 8.9% year-over-year due to the U.S. call center and other record collections.

PRA Group fundraising is likely to increase due to the increase in digital payments and technological advancements. We expect this trend to continue on the volume of purchases, the growth of the collector base and productivity.

However, escalating expenses due to investments continue to disrupt the business.

The company’s shares gained 17.6% in one year, outperforming its industry’s 16.7% growth.

Other companies in the same space, like Virtu Financial, Inc. VIRT and Jefferies Financial Group Inc. JEF also grew by 32.8% and 93.1% while Credit acceptance company CACC lost 3.2% in the same time frame.

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PRA Group, Inc. (PRAA): Free Inventory Analysis Report

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