Encore Capital Group Misses Where It Counts

Encore Capital Group (Nasdaq: ECPG  ) reported earnings on May 9. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 31 (Q1), Encore Capital Group met expectations on revenue and missed estimates on earnings per share.

Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share contracted significantly.

Gross margin improved, operating margin expanded, and net margin shrank.

Revenue details
Encore Capital Group chalked up revenue of $130.2 million. The six analysts polled by S&P Capital IQ wanted to see revenue of $130.1 million on the same basis. GAAP reported sales were 18% higher than the prior-year quarter's $110.3 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.44. The six earnings estimates compiled by S&P Capital IQ anticipated $0.66 per share. GAAP EPS of $0.44 for Q1 were 19% lower than the prior-year quarter's $0.54 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 82.3%, 120 basis points better than the prior-year quarter. Operating margin was 26.4%, 120 basis points better than the prior-year quarter. Net margin was 8.8%, 360 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $134.4 million. On the bottom line, the average EPS estimate is $0.70.

Next year's average estimate for revenue is $537.1 million. The average EPS estimate is $2.89.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 88 members out of 98 rating the stock outperform, and 10 members rating it underperform. Among 31 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 30 give Encore Capital Group a green thumbs-up, and one gives it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Encore Capital Group is outperform, with an average price target of $36.50.

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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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