Praa Caller
Source: PRA Group.

Collecting debts is big business, with the debt-collection companies that work for major corporate clients looking to profit by doing their customers' dirty work for them. Despite the negative reputation that the debt-collection industry has among most ordinary consumers, PRA Group (NASDAQ:PRAA) has done an impressive job of growing its collection business and finding ways to become more efficient and getting people who owe money to pay up. Coming into its second-quarter earnings report, PRA Group investors have high hopes that its business will remain strong, with continuing benefits from an improving economic picture in the U.S. as well as other favorable trends. Let's take an early look at PRA Group and what it's likely to tell its investors in its financial report this quarter.

Stats on PRA Group

Analyst EPS Estimate

$1.15

Change From Year-Ago EPS

32%

Revenue Estimate

$249.13 million

Change From Year-Ago Revenue

26%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

What's next for PRA Group earnings?
Investors have gotten more excited about PRA Group earnings in the past few months, keeping their second-quarter projections stable but boosting their full-year 2015 and 2016 views by 1% to 2%. The stock has recovered fully from weakness earlier in the year, rising 13% since late April and approaching all-time highs.

PRA Group's first-quarter results in May gave investors a solid foundation on which to build their case for the debt-collector's stock. Revenue gains of 26% from the year-ago quarter were actually slightly slower than what investors had hoped to see, but bottom-line growth of 42% showed that PRA Group has figured out how to make more from the revenue it brings in. Overall strength in PRA Group's core markets in the Western Hemisphere helped support its strong results, as the improving state of the U.S. economy has put more consumers in a better position to repay their outstanding debts rather than forcing PRA Group and other creditors to write them off. PRA Group's returns on equity of 30% are hard for competitors to match and show the huge potential in the industry.

Recently, PRA Group has seen the potential of expanding its reach across the globe. In May, the company continued its recent moves into Europe by hiring two key experts in the German insolvency debt-purchase market. By adding to PRA Group's capacity to make a smart entry into a huge new potential source of business -- especially given the financial stresses that Europe has undergone recently -- these hiring decisions and similar strategic moves that follow the company's acquisition of Aktiv Capital last year should help PRA Group become more of a global leader in debt collection.

However, a recent setback shows the dangers involved in the debt-collection business. In May, PRA Group subsidiary Portfolio Recovery Associates lost a court case against a Missouri resident in a case that involved the collector's mistakenly seeking to collect from a debtor with a similar name, and the jury awarded $83 million in punitive damages for allegations of malicious prosecution and impermissible collection practices. PRA Group said it intended to request the award be set aside, but it only shows the extent to which the company has to fight negative perception of its practices as well as complying with the many laws that govern collection activity.

In the PRA Group earnings report, watch for signs of further activity in the Missouri court case, but also keep your eyes turned across the Atlantic to see how well the company's European expansion is proceeding. With many opportunities for profit growth, PRA Group needs to do everything it can to take advantage of favorable conditions in the credit market if it wants to reach its strategic goals of being an important player in the global debt-collection market.

The son of PRA Group's CEO is currently employed by The Motley Fool. Dan Caplinger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of PRA Group. 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.