Trade-Ideas LLC identified

Encore Capital Group

(

ECPG

) as a weak on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Encore Capital Group as such a stock due to the following factors:

  • ECPG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $5.8 million.
  • ECPG has traded 377,039 shares today.
  • ECPG is trading at 42.23 times the normal volume for the stock at this time of day.
  • ECPG is trading at a new low 12.03% below yesterday's close.

'Weak on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as material stock news, analyst downgrades, insider selling, selling from 'superinvestors,' or that hedge funds and traders are piling out of a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize (or avoid losses by trimming weak positions). In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on ECPG:

Encore Capital Group, Inc., a specialty finance company, together with its subsidiaries, provides debt recovery solutions for consumers and property owners across a range of financial assets worldwide. The company operates in two segments, Portfolio Purchasing and Recovery, and Tax Liens. ECPG has a PE ratio of 13. Currently there are 6 analysts that rate Encore Capital Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Encore Capital Group has been 261,100 shares per day over the past 30 days. Encore Capital Group has a market cap of $613.5 million and is part of the financial sector and financial services industry. The stock has a beta of 1.42 and a short float of 45.1% with 28.57 days to cover. Shares are down 16.1% year-to-date as of the close of trading on Friday.

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TheStreetRatings.com

Analysis:

TheStreet Quant Ratings

rates Encore Capital Group as a

hold

. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and growth in earnings per share. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, deteriorating net income and generally higher debt management risk.

Highlights from the ratings report include:

  • ECPG's revenue growth has slightly outpaced the industry average of 1.6%. Since the same quarter one year prior, revenues slightly increased by 4.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 64.27% to $31.85 million when compared to the same quarter last year. In addition, ENCORE CAPITAL GROUP INC has also vastly surpassed the industry average cash flow growth rate of -83.55%.
  • ENCORE CAPITAL GROUP INC has improved earnings per share by 10.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENCORE CAPITAL GROUP INC reported lower earnings of $1.57 versus $3.83 in the prior year. This year, the market expects an improvement in earnings ($5.15 versus $1.57).
  • The debt-to-equity ratio is very high at 4.70 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Consumer Finance industry and the overall market, ENCORE CAPITAL GROUP INC's return on equity is significantly below that of the industry average and is below that of the S&P 500.

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