PRA Group (PRAA 3.81%) isn't a household name among most investors, but it's found a niche that has been lucrative over time. As a leading player in the debt collection industry, PRA Group aims to make it easier for businesses that are having challenges collecting from customers, by offering them cash and then taking responsibility for the cumbersome task of going through the collection process.

Coming into Thursday's second-quarter financial report, PRA Group investors wanted to see higher levels of activity but didn't necessarily expect to avoid further sluggishness on the earnings front. PRA's income levels did decline somewhat, but the company has redoubled its efforts and has made a commitment to taking full advantage of debt collection opportunities across the globe.

PRA Group keeps going after new business

PRA Group's second-quarter results showed the fruits of the debt collector's labor. Revenue of $252.1 million was up 14% from year-ago levels, and it exceeded the roughly 11% growth rate that most of those following the stock were looking to see. Net income attributable to the company declined 5% to $18.6 million, but earnings of $0.41 per share topped the consensus forecast among investors for $0.36 per share.

PRA Group logo with ribbons of blue, green, yellow, black, and white.

Image source: PRA Group.

Fundamentally, PRA Group looked healthy. It posted record global cash collection of $470.3 million, up 16% from year-ago levels. PRA said that it saw a nearly 40% jump in cash collections through its U.S. legal department, while more traditional call center and other cash collections domestically rose at a 12% pace. Although insolvency-related collection activity was lower, PRA's core business provided plenty of growth even as U.S. economic conditions remain relatively strong.

PRA stuck with its general strategy of investing new capital in areas that have the greatest potential. Total investment jumped 31% to $289.1 million, and the increase was entirely attributable to investments in the European market. In fact, PRA spent less money on U.S. portfolio assets than it did in the previous year's second quarter, reflecting the economic challenges in Europe that make it a more promising market for debt collection right now.

CEO Kevin Stevenson explained some of the trends that PRA Group is seeing. "Our core businesses globally are benefiting from operational improvements," Stevenson said, "that are both technology-based, such as the digital channel, and personnel-based, with productivity improvements." The CEO also believes that its disciplined approach in buying European assets has been the right way to take advantage of the market there.

What's ahead for PRA Group?

Looking ahead, PRA Group thinks it will continue to enjoy a favorable environment for its business worldwide. By bulking up its capacity, the debt collector has been able to increase the size of its portfolio while still being able to handle collections efficiently. That combination has opened the door to further growth, and investors can expect PRA to keep exploring ways to take maximum advantage of the opportunities it has identified with the workforce the company has in place.

As pricing conditions change in both the U.S. and Europe, though, it'll be important for PRA to maintain its high standards. By acquiring only those assets that meet its requirements for expected return and risk levels, PRA Group can avoid some of the mistakes that have caused less cautious debt collectors to overextend themselves in the past and get into financial trouble themselves.

PRA Group investors didn't have an immediate reaction to the news, and the stock was up just a fraction of a percent in after-hours trading following the announcement. Over the long run, though, PRA has established itself as an expert in debt collections, and that gives it the potential to keep expanding and cement its global leadership position in the industry in the years to come.