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It has been about a month since the last earnings report for Encore Capital Group (ECPG - Free Report) . Shares have lost about 1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Encore Capital Group due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Encore Capital’s Q2 Earnings Miss Despite Revenue Growth & Record CollectionsEncore Capital’s second-quarter 2026 earnings per share of $2.81 missed the Zacks Consensus Estimate of $3.07. However, the bottom line increased 13% year over year. The reported quarter’s earnings included refinancing costs of $1 per share.

Results primarily benefited from record global collections, strong U.S. execution, higher debt purchasing revenues and a robust balance sheet. However, an increase in expenses, along with lower servicing and other revenues, were the undermining factors.

Net income increased 9% year over year to $64 million.

Revenues Improve, Expenses RiseQuarterly revenues of $491.9 million surpassed the Zacks Consensus Estimate of $462.1 million. The top line increased 11% from the prior-year quarter.

Total debt purchasing revenues increased 13.1% from the prior-year quarter to $471.4 million. However, servicing revenues and other revenues declined 18.3% and 25%, respectively.

Total operating expenses increased 4.7% from the prior-year quarter to $305 million. The rise was due to an increase in salaries and employee benefits costs, and cost of legal collections.

Total global portfolio purchases were $443.8 million, up 20.9% year over year. The increase in portfolio purchases was driven by strong purchasing activity across both MCM and Cabot Credit Management businesses as market supply remained favorable and the company continued to deploy capital into attractive portfolios.

MCM portfolio purchases were $372.3 million in the quarter, up 17.3%. This represented the company’s strongest U.S. purchasing quarter. Cabot posted portfolio purchases of $71.5 million, up 43.5% year over year.

Global collections from purchased receivables increased 13% year over year to a record $737 million. MCM collections rose 16.6% to $571.9 million. The Cabot Credit Management collections were $164.3 million, up marginally from the prior-year quarter.

Balance Sheet StrongAs of June 30, 2026, Encore Capital had total assets worth $5.57 billion, up from $5.34 billion as of Dec. 31, 2025. The cash and cash equivalents balance was $182.9 million, up from $156.8 million at the end of 2025.

Borrowings were $4.18 billion as of June 30, 2026, while stockholders’ equity was $1.08 billion.

Share Repurchase UpdateIn the reported quarter, the company repurchased approximately $27 million in shares.

2026 OutlookGiven the strong first-half results, management raised its global collections guidance. It now expects collections in 2026 to increase 8-10% year over year to $2.8-$2.85 billion. Earlier, the company anticipated growth of 8% to $2.8 billion.

The company also raised its earnings outlook. It expects EPS to be $13-$14, even after absorbing $1 per share of refinancing costs incurred in the second quarter. Previously, earnings were projected to grow 19% to $13 per share.

Encore Capital maintained its portfolio purchasing outlook of $1.4-$1.5 billion.
Interest expenses and other income are projected to be $295 million.

The effective tax rate is anticipated to be in the mid-20%.

How Have Estimates Been Moving Since Then?In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 13.88% due to these changes.

VGM ScoresCurrently, Encore Capital Group has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the second quintile for value investors.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

OutlookEstimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Encore Capital Group has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Key Takeaways Encore raised 2026 EPS guidance to $13-$14, including a $1-per-share refinancing cost.ECPG lifted 2026 global collections guidance to $2.80-$2.85 billion, implying 8%-10% growth.Encore expects refinancing to save about $15 million annually, though borrowings reached $4.18 billion. Encore Capital Group, Inc. (ECPG - Free Report) raised key parts of its 2026 outlook after a strong first half, putting more weight on collections growth and operating execution. The revised guidance improves visibility into the earnings path.

The higher bar also increases the importance of delivery. Funding costs, leverage and rising legal collection expenses remain meaningful constraints as investors assess whether recent operating momentum can translate into sustained earnings growth.

Encore Capital Raises the Bar for 2026Encore now expects 2026 earnings of $13-$14 per share, up from its prior projection of about $13. The new range signals greater confidence in full-year performance after the first half.

The guidance includes $1 per share of refinancing costs absorbed in the second quarter. That makes the increase more notable because the higher range already incorporates the refinancing-related earnings drag.

The Zacks Consensus Estimate points to a clear earnings step-up. Earnings are projected to increase from $10.91 per share in 2025 to $13.52 in 2026 and $14.64 in 2027.

Earnings Estimates
 

Image Source: Zacks Investment Research

Estimate revisions add to that momentum. The current year earnings estimate has increased 3.9% over the past four weeks, suggesting analysts have become more constructive as collections and portfolio revenues improve.

Earnings Estimate Revision Trend
 

Image Source: Zacks Investment Research

ECPG's Collections Outlook Moves HigherManagement raised 2026 global collections guidance to $2.80-$2.85 billion, implying growth of 8%-10% year over year. The prior outlook called for about $2.8 billion, or 8% growth.

Second-quarter global collections rose 13% to a record $737 million. The result followed strong first-half execution and supports the view that recent portfolio purchases and collection improvements are translating into higher collections.

Driven by this momentum, the Zacks Consensus Estimate for sales reflects a year-over-year rise of 8.9% in 2026 and 2.1% in 2027.

Sales Estimates
 

Image Source: Zacks Investment Research

Encore Capital's Refinancing Adds a Funding TailwindEncore's May refinancing is expected to save about $15 million in annual interest expense. Lower financing costs can provide earnings support as the company continues deploying capital into receivable portfolios.

The benefit comes with an important offset. Encore expects 2026 interest expense, including other income, of about $295 million, underscoring the funding sensitivity of a business that relies on borrowings to finance portfolio purchases.

ECPG's U.S. Supply Supports Portfolio DeploymentEncore maintained its 2026 portfolio purchase outlook of $1.4-$1.5 billion. Management continues to see favorable U.S. supply, supported by elevated revolving credit balances and charge-offs, while Midland Credit Management's scale, analytics and collection capabilities help it target attractive returns.

PRA Group, Inc. (PRAA - Free Report) , another buyer and collector of nonperforming loan portfolios, said second-quarter 2026 portfolio income increased 7% to $267.8 million, driven by strong recent purchases at improved returns. Capital One Financial Corporation (COF - Free Report) , a major U.S. card lender, reports delinquency and charge-off trends that provide another read on the consumer-credit backdrop influencing future debt-sale supply.

Encore Capital Still Faces Cost and Leverage RisksLegal collection expenses increased 25.8% year over year in the first half of 2026. If collections growth slows, that faster-growing cost line could pressure operating leverage and cash efficiency.

Borrowings reached $4.18 billion at June 30, 2026. The company also remains heavily dependent on U.S. conditions, with Midland Credit Management accounting for 85.2% of first-half global portfolio purchasing dollars. Higher funding costs or weaker U.S. collections could therefore make the raised outlook harder to achieve.

How ECPG's Ratings Fit the Raised OutlookThe bottom line is that the raised outlook strengthens near-term earnings visibility, but execution still matters. ECPG currently carries a Zacks Rank #1 (Strong Buy), which is supportive of the stock's near-term earnings-revision picture. Like Encore Capital, PRA Group also sports a Zacks Rank #1, while Capital One carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Its Style Scores are mixed. ECPG has a Value Score of B, Growth Score of F, Momentum Score of C and VGM Score of F. The favorable Value Score complements the top Zacks Rank, while the weaker Growth and VGM Scores argue for monitoring whether improved guidance translates into durable growth rather than assuming the outlook upgrade settles the investment case.

Favorable purchasing conditions continue in U.S. marketGlobal portfolio purchases of $444 million, including record $372 million in U.S.Global collections up 13% to record $737 million  Earnings per share of $2.81 includes $1.00 per share of refinancing costs SAN DIEGO, Aug. 05, 2026 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (NASDAQ: ECPG), an international specialty finance company, today reported consolidated financial results for the second quarter ended June 30, 2026.

“Encore’s performance in the second quarter affirmed our industry leadership through record U.S. portfolio purchasing and record global collections in addition to meaningfully improving the funding of our global business through a billion-dollar refinancing at attractive terms,” said Ashish Masih, President and Chief Executive Officer. “Second quarter global portfolio purchases were $444 million and global collections were $737 million. This collections performance helped drive GAAP net income in the second quarter of $64 million or $2.81 per share, which includes refinancing costs of $1.00 per share.”

“Our MCM business in the U.S. continues to deliver very strong results. Capitalizing on the ongoing attractive market opportunity in the U.S. driven by ample portfolio supply, MCM purchased $372 million of portfolios in the second quarter, our strongest purchasing quarter ever. MCM also delivered record collections of $572 million in the second quarter, up 17% compared to Q2 a year ago. This exceptional collections performance is the result of strong execution and continued significant portfolio purchasing as well as the deployment of new technologies, enhanced digital capabilities and continued operational innovation.”

“Our Cabot business in Europe delivered a solid second quarter. Portfolio purchases were $72 million while collections of $164 million were in line with the second quarter last year.”

“In May we refinanced $1 billion of debt, incurring $30.5 million of refinancing costs in the second quarter, which will save approximately $15 million in annual interest expense going forward.”

“As a result of our strong first half of the year, we are revising our global collections guidance and now expect our full-year 2026 collections to be in a range between $2.80 billion and $2.85 billion, reflecting year-over-year growth of 8-10%. Additionally, we now expect our EPS in 2026 to be within a range from $13.00 to $14.00 per share, even after absorbing $1.00 per share of refinancing costs in the second quarter. Our guidance for portfolio purchasing remains within a range from $1.4 billion to $1.5 billion. As always, we remain committed to the critical role we play in the consumer credit ecosystem and to helping consumers restore their financial health,” said Masih.

In the second quarter, the company repurchased approximately $27 million of its shares of common stock.

Financial Highlights for the Second Quarter of 2026:

 Three Months Ended June 30,(in thousands, except percentages and earnings per share)2026
 2025
 ChangePortfolio purchases(1)$443,815 $367,099 21%Average receivable portfolios(2)$4,523,560 $4,068,656 11%Estimated Remaining Collections (ERC)$10,178,335 $9,362,400 9%Collections$736,864 $654,985 13%Revenues$491,872 $442,122 11%Operating expenses$304,970 $291,389 5%Net income$63,999 $58,721 9%Earnings per share$2.81 $2.49 13%          ______________________

(1)Includes U.S. purchases of $372.3 million and $317.3 million, and Europe purchases of $71.5 million and $49.8 million in Q2 2026 and Q2 2025, respectively.(2)Represents the average of receivable portfolios for the quarter (sum of receivable portfolios at the beginning and end of the quarter divided by 2).   Conference Call and Webcast

Encore will host a conference call and slide presentation today, August 5, 2026, at 2:00 p.m. Pacific / 5:00 p.m. Eastern time, to present and discuss second quarter results.

Members of the public are invited to access the live webcast via the Internet by logging in on the Investor Relations page of Encore's website at encorecapital.com. To access the live conference call by telephone, please pre-register using this link. Registrants will receive confirmation with dial-in details.

For those who cannot listen to the live broadcast, a replay of the webcast will be available on the Company's website shortly after the call concludes.

Non-GAAP Financial Measures

This news release includes certain financial measures that exclude the impact of certain items and therefore have not been calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company has included information concerning adjusted EBITDA because management utilizes this information in the evaluation of its operations and believes that this measure is a useful indicator of the Company’s ability to generate cash collections in excess of operating expenses through the liquidation of its receivable portfolios. Adjusted EBITDA has not been prepared in accordance with GAAP and should not be considered as an alternative to, or more meaningful than, net income and net income per share as indicators of the Company’s operating performance. Further, this non-GAAP financial measure, as presented by the Company, may not be comparable to similarly titled measures reported by other companies. A reconciliation of Adjusted EBITDA to its most directly comparable GAAP financial measure is below.

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 http://www.encorecapital.com.  

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 (including purchases and collections), performance, supply and pricing, liquidity, 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 report on Form 10-K, as it may be amended from time to time. The Company disclaims any intent or obligation to update these forward-looking statements.

Contact:

Bruce Thomas
Encore Capital Group, Inc.
Vice President, Global Investor Relations
[email protected]

SOURCE: Encore Capital Group, Inc.

FINANCIAL TABLES FOLLOW

ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Financial Condition
(In Thousands, Except Par Value Amounts)
(Unaudited)
  June 30,
2026 December 31,
2025Assets   Cash and cash equivalents$182,932  $156,784 Receivable portfolios, net 4,609,705   4,371,532 Property and equipment, net 80,615   82,080 Other assets 163,269   193,113 Goodwill 528,742   536,291 Total assets$5,565,263  $5,339,800 Liabilities and Equity   Liabilities:   Accounts payable and accrued liabilities$190,810  $230,261 Borrowings 4,179,515   4,001,293 Other liabilities 116,221   131,496 Total liabilities 4,486,546   4,363,050 Commitments and Contingencies   Equity:   Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding —   — Common stock, $0.01 par value, 75,000 shares authorized, 21,209 and 21,688 shares issued and outstanding as of June 30, 2026 and December 31, 2025, respectively 212   217 Additional paid-in capital —   — Accumulated earnings 1,209,896   1,104,640 Accumulated other comprehensive loss (131,391)  (128,107)Total stockholders’ equity 1,078,717   976,750 Total liabilities and stockholders’ equity$5,565,263  $5,339,800          The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. Most assets in the table below include those assets that can only be used to settle obligations of consolidated VIEs. The liabilities exclude amounts where creditors or beneficial interest holders have recourse to the general credit of the Company.

 June 30,
2026 December 31,
2025Assets   Cash and cash equivalents$47,527 $40,256Receivable portfolios, net 1,221,069  1,151,221Other assets 4,272  3,540Liabilities   Accounts payable and accrued liabilities 2,545  3,101Borrowings 785,213  791,182Other liabilities 315  2,774       ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
  Three Months Ended
June 30, Six Months Ended
June 30, 2026
 2025
 2026
 2025
Revenues       Portfolio revenue$400,242  $361,174  $790,261  $706,392 Changes in recoveries 71,115   55,599   133,855   77,063 Total debt purchasing revenue 471,357   416,773   924,116   783,455 Servicing revenue 18,228   22,300   38,866   44,847 Other revenues 2,287   3,049   4,301   6,595 Total revenues 491,872   442,122   967,283   834,897 Operating expenses       Salaries and employee benefits 119,585   117,738   234,126   223,670 Cost of legal collections 96,599   79,649   185,820   147,662 General and administrative expenses 38,724   41,327   78,353   82,345 Other operating expenses 36,831   36,990   71,664   71,242 Collection agency commissions 6,119   8,374   12,456   15,247 Depreciation and amortization 7,112   7,311   13,970   14,655 Total operating expenses 304,970   291,389   596,389   554,821 Income from operations 186,902   150,733   370,894   280,076 Other expense       Interest expense (73,907)  (73,943)  (146,957)  (144,473)Loss on extinguishment of debt (30,533)  —   (30,533)  — Other income 385   1,226   1,175   2,873 Total other expense (104,055)  (72,717)  (176,315)  (141,600)Income before income taxes 82,847   78,016   194,579   138,476 Provision for income taxes (18,848)  (19,295)  (44,337)  (32,959)Net income$63,999  $58,721  $150,242  $105,517         Earnings per share:       Basic$2.97  $2.50  $6.94  $4.45 Diluted$2.81  $2.49  $6.66  $4.41         Weighted average shares outstanding:       Basic 21,554   23,507   21,640   23,692 Diluted 22,791   23,578   22,555   23,926                  ENCORE CAPITAL GROUP, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited, In Thousands)  Six Months Ended June 30, 2026
 2025
Operating activities:   Net income$150,242  $105,517 Adjustments to reconcile net income to net cash provided by operating activities:   Depreciation and amortization 13,970   14,655 Loss on extinguishment of debt 30,533   — Other non-cash interest expense, net 5,189   7,211 Stock-based compensation expense 10,618   8,707 Changes in recoveries (133,855)  (77,063)Other, net 7,623   7,045 Changes in operating assets and liabilities   Other assets 8,530   14,897 Accounts payable, accrued liabilities and other liabilities (39,904)  (26,162)Net cash provided by operating activities 52,946   54,807 Investing activities:   Purchases of receivable portfolios, net of put-backs (800,301)  (725,391)Collections applied to receivable portfolios 665,017   553,400 Purchases of property and equipment (13,249)  (13,320)Other, net 17,883   15,659 Net cash used in investing activities (130,650)  (169,652)Financing activities:   Payment of loan and debt refinancing costs (38,382)  (2,491)Proceeds from credit facilities 791,079   549,605 Repayment of credit facilities (723,790)  (418,463)Proceeds from senior secured notes 1,128,676   — Repayment of senior secured notes (983,540)  — Repurchase and retirement of common stock (47,029)  (25,215)Other, net (20,182)  (16,206)Net cash provided by financing activities 106,832   87,230 Net increase (decrease) in cash and cash equivalents 29,128   (27,615)Effect of exchange rate changes on cash and cash equivalents (2,980)  646 Cash and cash equivalents, beginning of period 156,784   199,865 Cash and cash equivalents, end of period$182,932  $172,896     Supplemental disclosures of cash flow information:   Cash paid for interest$148,719  $133,830 Cash paid for income taxes, net of refunds 33,786   29,278 Supplemental schedule of non-cash investing activities:   Receivable portfolios transferred to real estate owned$1,868  $2,011          ENCORE CAPITAL GROUP, INC.
Supplemental Financial InformationReconciliation of Non-GAAP Metrics
 Adjusted EBITDA
  Three Months Ended
June 30, Six Months Ended
June 30,(in thousands, unaudited)2026
 2025
 2026
 2025
GAAP net income, as reported$63,999  $58,721  $150,242  $105,517 Adjustments:       Interest expense 73,907   73,943   146,957   144,473 Interest income (1,092)  (1,362)  (2,186)  (2,908)Provision for income taxes 18,848   19,295   44,337   32,959 Depreciation and amortization 7,112   7,311   13,970   14,655 Stock-based compensation expense 6,043   5,283   10,618   8,707 Acquisition, integration and restructuring related expenses(1) 3,213   1,042   4,678   1,290 Loss on extinguishment of debt 30,533   —   30,533   — Adjusted EBITDA$202,563  $164,233  $399,149  $304,693 Collections applied to principal balance(2)$269,880  $244,677  $539,349  $488,977  ________________________

(1)Amount represents acquisition, integration and restructuring related expenses. We adjust for this amount because we believe these expenses are not indicative of ongoing operations; therefore, adjusting for these expenses enhances comparability to prior periods, anticipated future periods, and our competitors’ results.(2)Amount represents (a) gross collections from receivable portfolios less (b) debt purchasing revenue, plus (c) proceeds applied to basis from sales of real estate owned (“REO”) assets and, when applicable, other receivable portfolios. A reconciliation of “collections applied to receivable portfolios, net” to “collections applied to principal balance” is available in the Form 10-Q for the period ending June 30, 2026.

July 06, 2026 16:05 ET  | Source: Encore Capital Group, Inc.

SAN DIEGO, July 06, 2026 (GLOBE NEWSWIRE) -- Encore Capital Group, Inc. (Nasdaq:ECPG), an international specialty finance company, announced today that it will release its financial results for the second quarter 2026 on Wednesday, August 5, 2026, after the market closes. The Company will also host a conference call and slide presentation the same day at 2:00 p.m. Pacific / 5:00 p.m. Eastern time with Ashish Masih, President and Chief Executive Officer, Tomas Hernanz, Executive Vice President and Chief Financial Officer, and Bruce Thomas, Vice President, Global Investor Relations, presenting and discussing the reported results.

Members of the public are invited to access the live webcast via the Internet by logging in on the Investor Relations page of Encore's website at www.encorecapital.com. To access the live conference call by telephone, please pre-register using this link. Registrants will receive confirmation with dial-in details.

For those who cannot listen to the live broadcast, a replay of the webcast will be available on the Company's website shortly after the call concludes.

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.

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

SOURCE: Encore Capital Group, Inc.

Key Takeaways ECPG has surged 56.2% in six months, but still trades at just 6.4X forward 12-month earnings.Encore Capital's first-quarter 2026 EPS beat estimates by 18.4%, while revenues rose 21%.ECPG's low multiple supports value appeal, but debt, legal costs and Cabot weakness remain risks. Encore Capital Group (ECPG - Free Report) is no longer a turnaround story waiting for proof. Shares have climbed 56.2% in the past six months and 120.4% over the trailing 12-month period.

The valuation question is now harder. Investors must decide whether low earnings multiples and higher profit forecasts still leave room for upside, or whether leverage and cost risks should cap the rerating.

Why ECPG Still Looks Cheap on EarningsECPG trades at 6.4X forward 12-month earnings, while its current fiscal-year price-to-earnings ratio is 6.6. That remains below 7.88X for the Zacks sub-industry, 16.29X for the Zacks Finance sector and 21.32X for the S&P 500 index.

The stock is also trading at its five-year median forward multiple of 6.4X, despite a stronger operating setup than it had during weaker collection periods. Its five-year range of 4.14X to 12.84X leaves room for a higher multiple if earnings quality continues to improve.

Image Source: Zacks Investment Research

PRA Group, Inc. (PRAA - Free Report) is the closest public comparison because it also acquires and collects nonperforming loan portfolios. That makes portfolio supply, funding access and recovery efficiency central issues for both companies. On the other hand, FirstCash Holdings, Inc. (FCFS - Free Report) offers a different way to view consumer-finance exposure. Its pawn-focused model depends less on charged-off receivable purchases, making it a useful contrast to ECPG’s debt-purchasing cycle.

At present, PRA Group and FirstCash Holdings are trading at a premium to ECPG.

How Encore Capital Earnings Are Moving HigherEncore’s latest quarter helped reset the earnings base. First-quarter 2026 earnings of $3.86 per share beat the Zacks Consensus Estimate by 18.4%, while revenues of $475 million rose 21% year over year.

The operating support was clear. Global collections increased 19% to a record $718.4 million, and the U.S. MCM business generated record collections of $556 million, up 23% from the prior-year quarter.

Management raised its 2026 earnings outlook to $13 per share from $12, implying 19% year-over-year growth. The consensus estimate shows earnings rising from $10.91 in 2025 to $13.01 in 2026 and $13.86 in 2027.

Image Source: Zacks Investment Research

What the ECPG Price Target ImpliesThe $99 price target reflects 7.38X forward earnings. That is not an aggressive multiple relative to the broader market, but it does imply some rerating from the current 6.40X forward 12-month level.

A modest multiple expansion could be supported if collection outperformance keeps flowing into results. Collections exceeded expectations in the first quarter, and positive changes in expected future recoveries suggest estimated remaining collection curves are beginning to move higher.

As those curves adjust, management expects more of the benefit to shift from cash overperformance into portfolio revenues. Stronger reported portfolio revenue can make earnings visibility more durable.

Why Encore Capital Is Not a Simple Value BetECPG’s low multiple comes with balance-sheet risk. Borrowings totaled $4.03 billion at the end of the first quarter, and the company depends on debt funding to purchase receivable portfolios.

Interest expense and other income are projected to total about $300 million in 2026. If borrowing costs remain elevated or portfolio returns normalize, the earnings benefit from higher collections could face pressure.

Legal collection costs are another margin risk. Rising legal activity can support recoveries, but it can also create fixed and semi-variable cost pressure if collections growth slows.

The business mix adds a limitation. The U.S. business is driving most of the momentum, while Cabot in Europe continues to face subdued lending, low delinquencies and strong competition.

How ECPG’s Scores Shape the Investment CallThe bottom line is that ECPG still looks inexpensive, but not risk-free. The earnings reset, low forward multiple and $99 price target support the undervaluation argument, while leverage, legal costs and geographic concentration keep the case selective.

ECPG currently sports a Zacks Rank #1 (Strong Buy), which supports the view that estimate trends remain favorable in the near term. Its Value Score of B also strengthens the bargain case for investors focused on valuation. You can see the complete list of today’s Zacks #1 Rank stocks here.

The rest of the style profile is less supportive. ECPG has a VGM Score of C, Growth Score of D and Momentum Score of F. That mix suggests the stock is better viewed as a selective value opportunity backed by earnings revisions, rather than an all-clear momentum play after a major rally.