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July 22, 2026 16:05 ET  | Source: Encore Capital Group, Inc.

SAN DIEGO, July 22, 2026 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (Nasdaq: ECPG) (“Encore” or the “Company”), an international specialty finance company, announced today that on July 22, 2026 (the “Redemption Notice Date”), it has issued a notice (the “Redemption Notice”) to holders of the Company’s 4.00% Convertible Senior Notes due 2029 (CUSIP No. 292554 AP7) (the “Notes”), calling all $230.0 million aggregate principal amount of the Notes for redemption on September 24, 2026 (the “Redemption Date”). The Company’s redemption right in respect of the Notes arises pursuant to Section 14.07 of the Indenture, dated as of March 3, 2023 (the “Indenture”), between the Company and Truist Bank, as trustee (the “Trustee”), as a result of the last reported sale price per share of the Company’s common stock having exceeded 130% of the conversion price on each of at least 20 trading days (whether or not consecutive) during the 30 consecutive trading days ending on, and including, the trading day immediately before the Redemption Notice Date.

Redemption Process

The redemption price will be payable on the Redemption Date in cash and equal to 100% of the principal amount of the Notes outstanding on the Redemption Date, plus accrued and unpaid interest on such Notes to, but excluding, the Redemption Date (the “Redemption Price”). For each $1,000 principal amount of Notes, the Redemption Price will be equal to approximately $1,001. Unless the Company defaults in making payment of the Redemption Price, interest on the Notes will cease to accrue on and after the Redemption Date.

For all Notes surrendered in book-entry form, payment of the Redemption Price will be made through the facilities of The Depository Trust Company (“DTC”), and all redeemed Notes in book-entry form will be surrendered for payment of the Redemption Price in accordance with the applicable rules and procedures of DTC.

Right to Convert the Notes

Holders of the Notes may surrender their Notes (or any portion thereof having a principal amount that is an integral multiple of $1,000) for conversion at any time prior to 5:00 p.m. (New York City time) on September 22, 2026 or, if the Company fails to pay the Redemption Price on the Redemption Date, such later date on which the Redemption Price is paid. To convert any Note, the holder must comply with the applicable rules and procedures of DTC. Upon conversion, a holder will not receive any separate cash payment for accrued and unpaid interest, and the Company’s settlement of the conversion obligation shall be deemed to satisfy in full its obligation to pay the principal amount of the Note and accrued and unpaid interest to, but excluding, the relevant conversion date. Any Notes submitted for conversion after they are called for redemption will be settled in cash. Any Notes not converted prior to the applicable deadline will be redeemed for the Redemption Price on the Redemption Date and will thereafter be canceled and cease to be outstanding.

As of the Redemption Notice Date, the conversion rate of the Notes is 15.1763 shares of common stock per $1,000 principal amount of Notes, which is equivalent to a conversion price of approximately $65.89 per share.

The sending of the Redemption Notice to the holders of the Notes constitutes a “Make-Whole Fundamental Change” under the Indenture, and therefore the conversion rate is required to be increased in accordance with Section 13.03 of the Indenture for Notes surrendered for conversion during the period beginning on, and including, the Redemption Notice Date, and ending at 5:00 p.m. (New York City time) on September 22, 2026 (the “Make-Whole Conversion Period”). The conversion rate applicable to such conversions will be increased by 1.0293 additional shares to 16.2056 shares of common stock per $1,000 principal amount of Notes, which is equivalent to a conversion price of approximately $61.71 per share. The conversion rate will remain subject to adjustment in accordance with the Indenture from time to time upon the occurrence of certain events.

Truist Bank is acting as Trustee, paying agent and conversion agent under the Indenture, and its address is 2713 Forest Hills Road, Building 2 - Floor 2, Wilson, North Carolina 27893, Attention: Encore Capital Group – Client Manager – Patrick Giordano.

Holders who have questions or who wish to discuss the redemption may contact the Company’s Investor Relations representative by email at [email protected].

This press release does not constitute a notice of redemption under the Indenture. The Redemption Notice is being delivered to holders separately in accordance with the terms of the Indenture. This press release is neither an offer to sell nor a solicitation of an offer to buy the Notes or any other securities and shall not constitute an offer to sell or a solicitation of an offer to buy, or a sale of, the Notes or any other securities in any jurisdiction in which such offer, solicitation or sale is unlawful. No representation is made as to the correctness or accuracy of the CUSIP number either as printed on the notes or as contained in this press release.

Capped Call Transactions

In connection with the pricing of the Notes in February 2023, the Company entered into privately negotiated capped call transactions with certain financial institutions (the “option counterparties”). In connection with the redemption, the Company expects that the capped call transactions will unwind and terminate in full. In connection with any such unwind and termination, the Company would receive from each option counterparty an amount of cash (or shares of the Company’s common stock if agreed with the applicable option counterparty) reflecting the then-current option value of such capped call transaction, as determined pursuant to the terms of such transaction or as otherwise agreed with the Company. The Company expects to enter into bilateral unwind agreements with each option counterparty to unwind and terminate its respective capped call transaction as of or shortly following the Redemption Date, with a termination value determined based on the market price of the Company’s common stock over a valuation period expected to end shortly prior to the Redemption Date and payable to the Company on or shortly following the Redemption Date, in each case, subject to extension.

In connection with unwinding and terminating the capped call transactions, the option counterparties and/or their respective affiliates are expected to unwind various derivative transactions with respect to the Company’s common stock and/or sell shares of the Company’s common stock or other securities of the Company in secondary market transactions. This activity may have the effect of decreasing (or reducing the size of any increase in) the market price of the Company’s common stock.

About Encore Capital Group, Inc.

Encore Capital Group is an international specialty finance company that provides debt recovery solutions and other related services for consumers across a broad range of financial assets. Through its subsidiaries around the globe, Encore purchases portfolios of consumer receivables from major banks, credit unions, and utility providers.

Encore partners with individuals as they repay their debt obligations, helping them on the road to financial recovery and ultimately improving their economic well-being. Encore is the first and only company of its kind to operate with a Consumer Bill of Rights that provides industry-leading commitments to consumers. Headquartered in San Diego, Encore is a publicly traded NASDAQ Global Select company (ticker symbol: ECPG) and a component stock of the Russell 2000, the S&P Small Cap 600 and the Wilshire 4500. More information about the company can be found at www.encorecapital.com.

Cautionary Note Regarding Forward-Looking Statements

The statements in this press release that are not historical facts, including, most importantly, those statements preceded by, or that include, the words “will,” “may,” “believe,” “projects,” “expects,” “anticipates” or the negation thereof, or similar expressions, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (the “Reform Act”). These statements may include, but are not limited to, statements regarding our future operating results, performance, liquidity, ability to access capital markets, business plans or prospects. For all “forward-looking statements,” the Company claims the protection of the safe harbor for forward-looking statements contained in the Reform Act. Such forward-looking statements involve risks, uncertainties and other factors which may cause actual results, performance or achievements of the Company and its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These risks, uncertainties and other factors are discussed in the reports filed by the Company with the Securities and Exchange Commission, including the most recent reports on Forms 10-K and 10-Q, each as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.

Contacts

Bruce Thomas
Encore Capital Group, Inc.
[email protected]

Key Takeaways Encore Capital is benefiting from strong U.S. supply, elevated lending and near-peak charge-offs.ECPG's global collections rose 19% to a record $718.4 million in the first quarter of 2026.Tech gains are lifting collections, but legal costs, funding pressure and Cabot weakness remain risks. Encore Capital Group (ECPG - Free Report) is showing how the debt-recovery cycle is shifting. Strong U.S. supply and better collection tools are lifting results, while costs and funding remain pressure points.

The next phase depends on whether technology-driven collection gains can offset legal expense growth, Europe’s slower backdrop and higher interest costs.

How ECPG Reflects a Stronger U.S. Recovery CycleEncore’s U.S. business is benefiting from elevated lending activity, near-peak charge-off levels and stable delinquency trends. Those conditions are supporting a steady flow of receivable portfolios.

The U.S. cycle matters because debt buyers need both supply and capital to scale profitably. Encore’s size and funding flexibility help it compete as smaller buyers face regulatory and financing constraints.

The first quarter of 2026 showed that backdrop in action. Midland Credit Management, Encore’s U.S. platform, posted portfolio purchases of $315.8 million, one of its strongest U.S. purchasing quarters.

PRA Group, Inc. (PRAA - Free Report) gives investors a direct peer reference because it also acquires and collects nonperforming loans. For both companies, portfolio supply and collection efficiency are central to earnings.

How Encore Capital Uses Tech to Lift CollectionsTechnology is becoming more than an efficiency project. New tools, digital capabilities and operating innovation are helping Encore reach more consumers and expand its payer base.

That showed up in collections. Global collections rose 19% year over year to a record $718.4 million in the first quarter of 2026, while U.S. collections increased 23% to $556 million.

The company also collected $46 million more than forecast in the quarter. Changes in expected future recoveries were positive by $16.7 million, showing that outperformance is starting to affect future expectations.

Management expects the benefit to shift over time from cash overs to stronger portfolio revenue as Estimated Remaining Collections curves adjust upward. That would make the technology impact more visible in revenues.

The Zacks Consensus Estimate for ECPG’s sales suggests growth of 5.5% for 2026 and 2.7% for 2027.

Image Source: Zacks Investment Research

Why ECPG Faces a Cost and Margin TestThe same collection environment that supports recoveries can also raise costs. Legal collection activity has increased, and those expenses have been rising faster than overall expenses.

That matters because legal collections can carry a higher fixed and semi-variable cost base. If collection growth slows, the expense structure could weigh on operating leverage and reduce cash efficiency margins.

Encore’s first-quarter cash efficiency margin improved to 60.9% from 58.3% a year earlier. Maintaining that margin profile will require collections growth to stay ahead of cost pressure.

Funding is another test. Borrowings totaled $4.03 billion as of March 31, 2026, and interest expense and other income are projected at about $300 million in 2026.

Why Encore Capital Shows a Split Global BackdropEncore’s geographic story is uneven. The United States remains the growth engine, helped by portfolio supply and stable consumer payment behavior.

Cabot, the company’s European business, remains in a slower market. The U.K. faces subdued consumer lending, low delinquencies and robust competition, limiting purchase growth.

Cabot still delivered collections of $161 million in the first quarter, up 7% year over year. The business is focused on cost control and operational execution.

Disciplined capital deployment in Europe protects returns but leaves ECPG more dependent on U.S. conditions. FirstCash Holdings, Inc. (FCFS - Free Report) offers a different consumer-finance comparison because its business centers on pawn operations rather than charged-off receivable purchases, giving investors another view of consumer-credit exposure.

How ECPG’s Ratings Frame These TrendsThe bottom line is that ECPG enters 2026 with better collection momentum, but margin durability remains the key test. Legal costs, borrowing costs and Europe’s slower backdrop could limit the benefit if U.S. collections cool.

Encore Capital has rallied sharply, with shares up 58.1% year to date. The move reflects stronger collections, favorable U.S. purchasing conditions and improving earnings expectations.

Image Source: Zacks Investment Research

The ECPG stock currently sports a Zacks Rank #1 (Strong Buy). That supports the view that earnings estimate direction remains favorable. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Style Scores add nuance. ECPG has a Value Score of B, which supports the relative value case, but its VGM Score of C is less forceful.

The Growth Score of D and Momentum Score of F suggest investors should watch execution rather than treat the stock as an all-clear growth or momentum play. The central question is whether digital gains can keep outpacing margin and funding headwinds.

Higher interest rates for a longer time and easing lending standards are brightening the outlook for the Zacks Consumer Loans industry. The Federal Reserve has paused rate cuts and signaled a hike amid signs of higher inflation. Yet, decent economic growth is expected to continue and even boost loan demand, supporting top-line growth.

While looser lending criteria and increased usage of technology are expanding the borrower base, subdued consumer confidence is a headwind. Nonetheless, industry players like Credit Acceptance Corporation (CACC - Free Report) , Enova International, Inc. (ENVA - Free Report) and Encore Capital Group, Inc. (ECPG - Free Report) are worth considering.

About the Industry The Zacks Consumer Loans industry comprises companies that provide mortgages, refinancing, home equity lines of credit, credit card loans, automobile loans, education/student loans and personal loans, among others. These help the industry players generate net interest income (NII), which forms the most important part of total revenues. The prospects of the companies in this industry are highly sensitive to the nation’s overall economic condition and consumer sentiments. In addition to offering the above-mentioned products and services, many consumer loan providers are involved in businesses like commercial lending, insurance, loan servicing and asset recovery. These support the companies in generating fee revenues. Furthermore, this helps the firms diversify revenue sources and be less dependent on the vagaries of the economy.

3 Themes Driving the Consumer Loan Industry's Future Interest Rates & Loan Demand: After lowering interest rates by 175 basis points since 2024, the Federal Reserve has paused its easing cycle and adopted a more hawkish stance. This shift reflects inflation remaining well above the central bank’s 2% target, exacerbated by the recent oil price shock stemming from geopolitical tensions in the Middle East. Additionally, consumer sentiment has remained weak since late 2025, with the Expectations Index staying below 80 for 16 consecutive months through May, a threshold that has historically signaled an elevated risk of recession. Despite these headwinds, demand for consumer loans is expected to remain resilient and gradually improve, supported by solid economic growth and a still-low unemployment rate. Consequently, industry participants are likely to benefit from continued expansion in net interest margins (NIM) and NII in the coming quarters.

Automation to Improve Operating Efficiency: Consumer loan providers are increasingly leveraging artificial intelligence (AI), machine learning (ML), robotic process automation and digital platforms to streamline loan origination, underwriting, servicing and customer onboarding. AI-driven credit assessment models analyze vast amounts of customer data in real time, enabling faster and more accurate lending decisions while reducing manual intervention, while digital onboarding tools lower acquisition costs and enhance customer experience. Meanwhile, AI-powered servicing and collections platforms improve operational efficiency and risk monitoring. These initiatives are expected to reduce processing expenses, support scalable growth and ultimately boost profitability through higher operating leverage and stronger returns.

Asset Quality: While lower interest rates have helped borrowers stay current on loan and interest repayments, persistent macroeconomic and geopolitical headwinds have kept inflation elevated. This has prompted the central bank to signal a potential rate hike later this year, which could somewhat weaken borrowers’ repayment capacity. As a result, consumer loan providers are likely to set aside substantial reserves for potential delinquencies. Moreover, several credit quality metrics are already trending above pre-pandemic levels.

Zacks Industry Rank Reflects an Optimistic Stance The Zacks Consumer Loans industry is a 12-stock group within the broader Zacks Finance sector. The industry currently carries a Zacks Industry Rank #30, which places it in the top 12% of more than 245 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates outperformance in the near term. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. Looking at the aggregate earnings estimate revisions, it appears that analysts are confident in this group’s earnings growth potential. Over the past year, the industry’s earnings estimates for 2026 and 2027 have been revised upward by 2.9% and 9.6%, respectively.

Before we present a few stocks that you may want to add to your portfolio, let's take a look at the industry’s recent stock market performance and valuation picture.

Industry vs. Broader Market The Zacks Consumer Loans industry has impressively outperformed the Zacks S&P 500 composite and its sector over the past two years.

The stocks in this industry have collectively soared 67.6% over this period, while the Zacks S&P 500 composite and the Zacks Finance sector have risen 42.4% and 37.2%, respectively.

Two-Year Price Performance

 

Industry Valuation One might get a good sense of the industry’s relative valuation by looking at its price-to-book ratio (P/B), commonly used for valuing consumer loan stocks because of significant variations in their financial performance from one quarter to the next.

The industry currently has a trailing 12-month P/B of 0.74X, below the median level of 0.76X over the past five years. This compares with the highest level of 1.04X and the lowest level of 0.55X over this period. The industry is trading at a considerable discount compared with the market at large, as the trailing 12-month P/B for the S&P 500 is 8.11X and the median level is 8.01X.

Price-to-Book Ratio (TTM)

As finance stocks typically have a lower P/B, comparing consumer loan providers with the S&P 500 may not make sense to many investors. However, comparing the group’s P/B ratio with that of its broader sector ensures that the group is trading at a decent discount. The Zacks Finance sector’s trailing 12-month P/B of 4.53X for the same period is way above the Zacks Consumer Loan industry’s ratio, as the chart below shows.

Price-to-Book Ratio (TTM)

 

3 Consumer Loan Stocks to Bet on Credit Acceptance Corporation: Headquartered in Southfield, MI, CACC offers financing programs and related products and services to automobile dealers across the United States, enabling them to sell vehicles to consumers irrespective of their credit history. Further, it is engaged in the business of reinsuring coverage under vehicle service contracts sold to consumers by dealers on vehicles financed by the company.

Revenue growth remains a major positive for Credit Acceptance, with the same witnessing a five-year (2020-2025) compound annual growth rate (CAGR) of 6.8%. Growth is primarily attributable to a steady rise in finance charges, which is also the main revenue component (accounting for almost 93% of total revenues in the first quarter of 2026). While finance charges are likely to witness headwinds from macroeconomic factors in the near term, solid dealer engagement will offer much-needed support. A steady rise in dealer enrolments and active dealers is expected to support the company’s top-line growth.

CACC continues to execute on a product roadmap aimed at reducing friction for dealers and scaling underwriting and servicing capacity without a proportional increase in expenses. The company is witnessing a steady rise in inbound customer service and account solutions calls routed to the AI-enabled agent, with plans to expand its usage going forward. Additionally, dealer-facing digitization is gaining traction. Over time, these are expected to support higher dealer engagement and improve operating efficiency.

The Zacks Consensus Estimate for earnings for 2026 and 2027 suggests growth of 20.1% and 13.7%, respectively. Shares of this Zacks Rank #2 (Buy) company have jumped 25.8% over the past six months. It has a market cap of $6.1 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price and Consensus: CACC

Enova International: Based in Chicago, IL, Enova is a leading financial technology company focused on providing online financial services. The company caters to small businesses and capitalizes on its proprietary technology, analytics and customer service capabilities to underwrite and fund loans.

Being an early entrant into online lending, the company has completed almost 65 million customer transactions and collected approximately 66 terabytes of consumer behavior data since its launch in 2004. This has enabled Enova to better analyze its specific customer base and expand small and medium businesses (SMB) lending. This Zacks Rank #2 company’s proprietary underwriting systems leverage advanced risk analytics, including ML and AI.

Moreover, the company has been diversifying its operations, which will support its long-term growth. In December 2025, Enova agreed to acquire Grasshopper Bancorp, which will boost its earnings over time. This will also expand the company’s ability to deliver a more comprehensive suite of financial products through a national bank charter, expanding access to credit to those who were traditionally underserved by banks.

The Zacks Consensus Estimate for earnings for 2026 and 2027 indicates an increase of 26.8% and 23.7%, respectively. ENVA’s shares have gained 24.1% over the past six months. It has a market cap of $5 billion.

Price and Consensus: ENVA

Encore Capital: Based in San Diego, CA, ECPG provides debt recovery and related financial services worldwide. Through its global subsidiaries, the company acquires portfolios of charged-off consumer receivables from leading banks, credit unions and utility providers, leveraging data-driven strategies to optimize collections and portfolio performance.

Encore Capital plans to leverage its leadership position in portfolio purchasing and recovery as well as credit management services to bolster its market share worldwide. Over the years, the company’s portfolio purchases and collections have increased, which supported its top-line expansion.

With rising delinquency/charge-off rates in the United States due to higher rates, there is more supply of non-performing loans. This offers Encore Capital an additional opportunity to purchase portfolios and apply its analytics and collections capabilities for higher returns. With scale, funding access and demonstrated execution, the company is expected to continue capturing high-return supply, extending collections growth beyond tax seasonality into subsequent quarters.

The company’s operating engine is delivering consistent overperformance that is now beginning to embed into forward estimates. Encore Capital is witnessing steadily higher collections than the forecasts, as technology, digital and operational innovations lift early-stage collections. Over the next few quarters, management expects the mix to transition from cash overs to higher portfolio revenue as ERC curves adjust upward.

Shares of this Zacks Rank #1 company has soared 52.4% over the past six months. ECPG’s earnings are expected to rise 19.3% in 2026 and 6.5% in 2027. The company has a market cap of $1.8 billion.

Price and Consensus: ECPG