Encore Capital dips -0.33

In this story I am going to address all ongoing Encore Capital shareholders. I will look into why despite ongoing dip, the longer-term fundamental drivers of the firm are still sound. In spite of rather sluggish fundamental drivers, Encore Capital exhibited solid returns over the last few months and may actually be approaching a breakup point. Macroaxis considers Encore Capital somewhat reliable given 1 month investment horizon. Encore Capital Group secures Sharpe Ratio (or Efficiency) of 0.2034 which denotes the organization had 0.2034% of return per unit of standard deviation over the last 1 month. Our philosophy in predicting volatility of a stock is to use all available market data together with stock specific technical indicators that cannot be diversified away. By reviewing Encore Capital Group technical indicators you can presently evaluate if the expected return of 0.7633% is justified by implied risk. Please utilize Encore Capital Group Downside Deviation of 2.46, Mean Deviation of 2.31 and Semi Deviation of 1.93 to check if our risk estimates are consistent with your expectations.
Published over a year ago
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Reviewed by Vlad Skutelnik

This firm currently holds 3.71B in liabilities with Debt to Equity (D/E) ratio of 423.7 indicating the stock may have difficulties to generate enough cash to satisfy its financial obligations. The company has Current Ratio of 16.96 suggesting that it is liquid enough and is able to pay its financial obligations when they are due. Encore Capital dividends can provide a clue to current valuation of the stock. The firm is not expected to issue dividends this year as it trying to preserve or re-invest any of the funds available for distribution to stakeholders. Lets now take a look at Encore Capital Current Asset. In accordance with recently published financial statements Encore Capital Group has Current Asset of 570.15M. This is 91.58% lower than that of the Financial Services sector, and 65.73% lower than that of Asset Management industry, The Current Asset for all stocks is 93.89% higher than Encore Capital.
Typically, a company's financial statements are the reports that show the financial position of the company. There are three main documents that fall into the category of financial statements. These documents include Encore Capital income statement, its balance sheet, and the statement of cash flows. Potential Encore Capital investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although Encore Capital investors may use each financial statement separately, they are all related. The changes in Encore Capital's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on Encore Capital's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our technical analysis and fundamental analysis pages.
The goal of Encore Capital fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of Encore Capital performance into the future periods or doing a reasonable stock valuation. The intrinsic value of Encore Capital shares is the value that is considered the true value of the share. If the intrinsic value of Encore is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares Encore Capital. Please read more on our fundamental analysis page.

How effective is Encore Capital in utilizing its assets?

Encore Capital Group reports assets on its Balance Sheet. It represents the amount of Encore resources that either has an existing economic value or will provide some form of benefits in the future. By effectively utilizing its assets, Encore Capital aims to generate revenue, control costs, drive operational efficiency, and enhance profitability. Optimizing asset utilization helps maximize shareholder value and maintain a competitive position in the Consumer Finance space. To get a better handle on how balance sheet or income statements item affect Encore volatility, please check the breakdown of all its fundamentals.

Are Encore Capital Earnings Expected to grow?

The future earnings power of Encore Capital involves the interaction of many company-specific, industry, and economic forces. Earnings estimates embody investors' opinions of Encore Capital factors such as sales growth, product demand, competitive industry environment, profit margins, and cost controls. Encore Capital stock prices adjust as these expectations change or are proven wrong. The main thing to remember is that equities with high expected earnings growth tend to underperform the market because it is usually difficult to meet the market's high expectations. Companies with low earnings expectations tend to do better than expected. Please use our latest analysis of Encore expected earnings.

Going after Encore Financials

Encore Capital Group has beta of 2.24. As market goes up, the company is expected to significantly outperform it. However, if the market returns are negative, Encore Capital will likely underperform. The latest price spikes of Encore Capital Group could raise concerns from investors as the firm closed today at a share price of 35.32 on 269113.000 in volume. The company executives were quite successful positioning the firm components to exploit market volatility in June 2019. The stock standard deviation of daily returns for 30 days (very short) investing horizon is currently 3.7522. The above-average volatility is mostly attributed to market volatility and speculations regarding some of the upcoming earning calls from Encore Capital partners. Encore Capital discloses 34.32% in operating margin. Encore Capital is selling at 35.79. That is 0.33 percent down. Opened at 35.79. Encore Capital Earning Before Interest and Taxes EBIT is rather stable at the moment. Also, Encore Capital Interest Coverage is decreasing over the last 5 years.
 2014 2015 2016 2018 2019 (projected)
Encore Capital Interest Expense 166,942,000  186,556,000  198,367,000  178,530,300  116,435,184 
Encore Capital Gross Profit 804,425,000  862,262,000  792,262,000  713,035,800  1,320,000,000 
In closing, we see that Encore Capital Slowly supersedes market. The firm is fairly valued with below average chance of financial distress within the next 24 months. Our primary buy/sell recommendation on the firm is Buy.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Rifka Kats do not own shares of Encore Capital Group. Please refer to our Terms of Use for any information regarding our disclosure principles.

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