NEW YORK (TheStreet) -- Portfolio Recovery Associates (PRAA - Get Report) was surging 15% to $58.17 on Thursdayg after the financial and businesses services company reported fourth-quarter earnings that surpassed analysts' expectations.
Portfolio Recovery reported net income of 91 cents a share, ahead of the Zacks consensus estimate of 89 cents. A year earlier, earnings were 70 cents a share. Revenue jumped almost 20% to $184.9 million, but came in just short of the Zacks consensus estimate of $186 million.
The company also received a boost from the announcement that it would acquire Aktiv Capital, an Oslo-based debt investment company, for $880 million. JMP Securities said in a research note on Thursday that the deal should be immediately accretive and that it should provide much-needed diversification. The firm reiterated its $72 target price and "outperform" rating on Portfolio Recovery after what it called "a positive and transformative acquisition by the company."
TheStreet Ratings team rates PORTFOLIO RECOVRY ASSOC INC as a "buy" with a ratings score of A. TheStreet Ratings Team has this to say about its recommendation:
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"We rate PORTFOLIO RECOVRY ASSOC INC (PRAA) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues rose by 31.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.55, is low and is below the industry average, implying that there has been successful management of debt levels.
- PORTFOLIO RECOVRY ASSOC INC has improved earnings per share by 42.4% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PORTFOLIO RECOVRY ASSOC INC increased its bottom line by earning $2.47 versus $1.95 in the prior year. This year, the market expects an improvement in earnings ($3.45 versus $2.47).
- The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Consumer Finance industry average. The net income increased by 42.1% when compared to the same quarter one year prior, rising from $33.31 million to $47.34 million.
- 45.32% is the gross profit margin for PORTFOLIO RECOVRY ASSOC INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.93% is above that of the industry average.
- You can view the full analysis from the report here: PRAA Ratings Report