The recent past hasn't been pretty at PRA Group (PRAA),
but with a couple of better quarters in hand, it seems reasonable to
think that this collector of charged-off receivables is back on track. I
don't believe it is realistic to expect the company to get back to the
ROE levels of yesterday - the market has changed, and PRA is a much
bigger share of the market now - but double-digit ROEs seem possible
again, as well as a return to healthy free cash flow generation.
PRA
Group is a tough company to analyze, but I expect to see improving
collection efficiency metrics, as well as increasing supply, in the
coming years. That supports a fair value in the high $30s to low $40s
today and makes this a name worth considering on pullbacks.
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PRA Group Back On Firmer Footing
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