PRA Group: Restructurings, Repeated Disappointments Strain Bull Thesis, But Risks Overstated
Summarize this article with:
Stephen Simpson20.5K FollowersFollow5ShareSavePlay(8min)CommentsSummaryPRA Group remains plagued by inconsistent core operating performance and repeated restructurings, leading its shares to lag rival Encore Capital.Recent CEO change brings another restructuring, including headcount cuts and a closer look at back-office IT, but risks remain around collections efficacy and sustainable improvement.Shares trade at a significant discount to historical multiples; fair value estimated at $21–$22, but sustained operational progress is needed to close the valuation gap.I maintain a 'buy' rating, largely on the basis of the market overstating PRAA's risks, and the likelihood that restructuring will produce another pop in earnings in 12-24 months. glegorly/iStock via Getty Images If you can accurately price charged-off debt and collect if efficiently, there is a lot of money to be made in receivables acquisition and collection, but heed those “ifs”. PRA Group (PRAA) has struggled to build and maintain anyThis article was written byStephen Simpson20.5K FollowersFollowStephen Simpson is a freelance financial writer and investor.Spent close to 15 years on the Street (sell-side, buy-side, equities, bonds).Analyst’s Disclosure:I/we have a beneficial long position in the shares of PRAA either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Recommended For You