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1. Company Snapshot

1.a. Company Description

Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide.The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery.It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services, as well as debt servicing and other portfolio management services to credit originator for non-performing loans.


The company was incorporated in 1999 and is headquartered in San Diego, California.

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1.b. Last Insights on ECPG

Encore Capital Group's recent performance was driven by its strong Q3 2025 earnings report, which saw the company beat estimates with quarterly earnings of $3.17 per share, surpassing the Zacks Consensus Estimate of $1.92 per share. The company's solid financial results and upward trend in earnings estimate revisions have led to a 27.4% upside potential, according to Wall Street analysts. Additionally, the company's recent upsized senior secured notes offering of $500 million demonstrates its ability to access capital markets. Zacks upgraded the stock to a Strong Buy, citing growing optimism about its earnings prospects.

1.c. Company Highlights

2. Encore Capital Group's Q3 2025 Earnings: A Strong Performance

Encore Capital Group delivered a robust financial performance in Q3 2025, with total revenues growing 25% to $460 million, driven by a 20% increase in collections to a record $663 million and a 13% rise in portfolio revenue. Earnings per share (EPS) came in at $3.17, significantly surpassing estimates of $1.92 and representing a remarkable increase of over 150% from Q3 2024. The company's net income rose 144% to $75 million, reflecting its strong operational performance. The company's leverage improved to 2.5x at the end of Q3, and it repurchased $10 million of its shares in the quarter.

Publication Date: Nov -17

📋 Highlights
  • Portfolio Purchases:: Increased 23% to $346 million in Q3 2025 compared to Q3 2024.
  • Record Collections:: Global collections rose 20% to $663 million, driven by U.S. MCM collections of $502 million (up 25%).
  • Earnings Surge:: Earnings per share (EPS) jumped 150% to $3.17, with net income up 144% to $75 million.
  • Deleveraging Progress:: Leverage ratio reduced to 2.5x by Q3 2025, with $60 million in share repurchases year-to-date and an additional $300 million authorized.
  • Revenue Growth:: Total revenues grew 25% to $460 million, with debt purchasing revenue up 27% to $434 million.

Operational Highlights

The company's U.S. business, Midland Credit Management (MCM), was a key driver of the strong performance, with collections increasing 25% to a record $502 million. The European business, Cabot, also delivered solid results, with portfolio purchases of $85 million and collections of $160 million, up 8% from Q3 2024. Ashish Masih noted that supply is good, and pricing is stable, which is expected to support future growth.

Guidance and Outlook

Encore Capital Group expects to exceed $1.35 billion in global portfolio purchases in 2025 and has raised its guidance on global collections to grow by approximately 18% to $2.55 billion. The company anticipates interest expense of approximately $295 million for the year and an effective tax rate in the mid-20s. The collections multiple for the U.S. core paper and the U.K. core paper is 2.3, indicating a stable and profitable business.

Valuation and Leverage

With a P/E Ratio of -25.52, the company's valuation appears to be influenced by its significant EPS growth. The EV/EBITDA ratio stands at 13.89, indicating a reasonable valuation relative to its earnings. The company's leverage ratio is expected to decline from 2.5x to 2.3x by mid-2026, driven by its strong earnings and cash flow generation. The Net Debt / EBITDA ratio is 10.74, which is relatively high, but the company's strong cash flow generation is expected to support deleveraging.

Share Repurchases and M&A

The company has been actively repurchasing its shares, with $60 million bought back year-to-date, and has authorized an additional $300 million under its share repurchase program. Encore Capital Group remains open to strategic M&A opportunities, but is maintaining a disciplined approach, with a high bar for potential acquisitions.

3. NewsRoom

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Encore Capital Group (NASDAQ:ECPG) & OneMain (NYSE:OMF) Head-To-Head Review

Dec -04

Source: defenseworld.net

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Creative Planning Has $881,000 Stock Position in Encore Capital Group Inc $ECPG

Dec -02

Source: defenseworld.net

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Campbell & CO Investment Adviser LLC Acquires New Stake in Encore Capital Group Inc $ECPG

Nov -17

Source: defenseworld.net

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Wall Street Analysts Believe Encore Capital Group (ECPG) Could Rally 27.35%: Here's is How to Trade

Nov -10

Source: zacks.com

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Encore Capital Group, Inc. (ECPG) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Encore Capital Group (ECPG) Tops Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

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Encore Capital Group Announces Third Quarter 2025 Financial Results

Nov -05

Source: globenewswire.com

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Best Value Stock to Buy for Oct. 13th

Oct -13

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (11.63%)

6. Segments

Receivable Portfolio

Expected Growth: 12%

Encore Capital Group's 12% growth in Receivable Portfolio is driven by strategic acquisitions, expansion into new markets, and increased investment in digital collections. Additionally, favorable regulatory environments, rising consumer debt, and effective portfolio management practices have contributed to this growth.

Servicing Revenue

Expected Growth: 10%

Encore Capital Group's 10% growth in Servicing Revenue is driven by increasing demand for debt recovery services, expansion into new markets, and strategic acquisitions. Additionally, the company's investments in digital transformation and process automation have improved operational efficiency, leading to higher revenue generation.

Changes in Recoveries

Expected Growth: 8%

The 8% growth in recoveries from Encore Capital Group, Inc. is driven by increased collections from charged-off debt, expansion into new markets, and improved operational efficiency. Additionally, strategic acquisitions and partnerships have enhanced the company's capabilities, leading to higher recovery rates. Furthermore, favorable regulatory environments and a growing demand for debt recovery services have also contributed to this growth.

Other

Expected Growth: 11%

Encore Capital Group's 11% growth in 'Other' segment is driven by increasing demand for debt recovery services, expansion into new markets, and strategic acquisitions. Additionally, the company's investments in digital transformation and data analytics have improved operational efficiency, leading to higher revenue and profitability.

7. Detailed Products

Contingency Fee Collections

Encore Capital Group provides contingency fee collections services, where the company earns a fee only if it successfully collects the debt.

Portfolio Purchasing

Encore Capital Group purchases debt portfolios from creditors, providing them with immediate liquidity.

First-Party Collections

Encore Capital Group provides first-party collections services, where the company acts as an extension of the creditor's in-house collections team.

Third-Party Collections

Encore Capital Group provides third-party collections services, where the company acts as an independent collections agency.

Business Process Outsourcing (BPO)

Encore Capital Group provides BPO services, including customer service, sales, and back-office operations.

Digital Debt Collection

Encore Capital Group provides digital debt collection services, using data analytics and digital channels to engage with debtors.

8. Encore Capital Group, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Encore Capital Group, Inc. is medium due to the presence of alternative debt recovery solutions, but the company's diversified portfolio and strong brand recognition mitigate this threat.

Bargaining Power Of Customers

The bargaining power of customers is low for Encore Capital Group, Inc. as the company's clients are primarily large financial institutions and governments, which have limited negotiating power.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Encore Capital Group, Inc. as the company relies on a network of suppliers and agents to collect debts, but has some flexibility to negotiate prices.

Threat Of New Entrants

The threat of new entrants is low for Encore Capital Group, Inc. due to the high barriers to entry, including regulatory hurdles and the need for significant capital investment.

Intensity Of Rivalry

The intensity of rivalry is high for Encore Capital Group, Inc. due to the competitive nature of the debt recovery industry, with several established players competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 77.99%
Debt Cost 4.90%
Equity Weight 22.01%
Equity Cost 10.82%
WACC 6.20%
Leverage 354.29%

11. Quality Control: Encore Capital Group, Inc. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Guild

A-Score: 5.5/10

Value: 5.1

Growth: 3.8

Quality: 4.2

Yield: 8.0

Momentum: 8.0

Volatility: 4.0

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Security National Financial

A-Score: 4.9/10

Value: 8.6

Growth: 5.0

Quality: 6.5

Yield: 0.0

Momentum: 3.0

Volatility: 6.0

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A-Score: 4.9/10

Value: 5.2

Growth: 7.1

Quality: 5.5

Yield: 0.0

Momentum: 4.0

Volatility: 7.3

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Encore Capital Group

A-Score: 4.0/10

Value: 7.9

Growth: 2.4

Quality: 5.0

Yield: 0.0

Momentum: 4.0

Volatility: 4.7

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loanDepot

A-Score: 3.9/10

Value: 6.4

Growth: 2.3

Quality: 3.9

Yield: 2.0

Momentum: 8.0

Volatility: 1.0

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Ocwen Financial

A-Score: 3.7/10

Value: 7.3

Growth: 3.8

Quality: 3.5

Yield: 0.0

Momentum: 5.0

Volatility: 2.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

53.55$

Current Price

53.55$

Potential

-0.00%

Expected Cash-Flows