PRAA - PRA Group On A Long Road Back But At Least It's Out Of The Ditch
2024-07-14 14:30:00 ET
Summary
- PRA Group allowed inefficiencies and operational issues in collections, purchasing, and overall operations to accumulate, driving terrible results in 2023 and a change in management.
- New management has moved quickly to make changes to improve operational efficiency and collections performance, leading to positive results in portfolio income and cash collections.
- Improving the portfolio will take longer, but credit card charge-offs are rising and PRA is well-placed to benefit from higher-yielding purchases over the next couple of years.
- Despite past challenges, PRA Group is on a better path now with potential for improved performance in the second half of 2024 and beyond, supporting a fair value around $30 on mid-single-digit core earnings growth.
It’s been a while since I’ve updated my thoughts on PRA Group ( PRAA ), and a lot has been going on at this underperforming debt collector in the meantime. When I last wrote about PRA , I thought the company was in for a rough 2023 ahead of better results in 2024 and 2025. As it turned out, “rough” didn’t really cover it, and the company’s 2023 results (and share price) were hammered by operational inefficiencies and poor collections performance....
PRA Group On A Long Road Back, But At Least It's Out Of The Ditch