- PRA Group delivered what should have been a very positive quarter, with a good revenue and operating income beat on strong collections, but forward-looking issues continue to loom.
- Estimated remaining collections declined year-over-year, purchases were sharply lower, and it looks like the supply of charged-off debt in 2021/22 is going to be lower than previously expected.
- Charge-offs will still increase in 2021 and 2022, but the opportunity to load up on attractive paper is smaller than it was; PRA will have to offset this with margins.
- PRA Group shares look undervalued on long-term growth assumptions of 6% to 8% across revenue, core earnings, and free cash flow.
For further details see:
PRA Group Shares Still Waiting On Questions Of Sustainability And Supply