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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Portfolio Recovery Associates (NASDAQ: PRAA ) were uncovering some strong gains today, climbing as much as 10% after posting a strong earnings report.
So what: The debt collection and factoring specialist topped estimates once again, posting an EPS of $2.56 against expectations of $2.25, up 37% from $1.87 a year ago. Revenue improved 24% to $183 million, also beating estimates, while cash collections were up 28% to $296 million. CEO Steve Fredrickson said the results were "exceptional by any measure," noting a significant investment of $200 million in new portfolio purchases. Fredrickson also said the company's competitive advantage with competencies in multiple asset classes, access to low-cost funding, and top-notch analytics should continue to drive growth.
Now what: This was the fourth straight earnings beat for Portfolio Recovery as the company appears to be firing on all cylinders. Considering the growth rate it's managed to keep up, shares seem undervalued at a P/E near 18, and actually faded through the session to trade at just 4% up toward the end of the session. With the economy continuing to underperform, it stands to reason that there will be plenty of bad debt going around to drive more business. I'd expect more standout quarters like this one from Portfolio Recovery.
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