Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link
NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and weak operating cash flow.
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Highlights from the ratings report include:
- ECPG's very impressive revenue growth greatly exceeded the industry average of 1.3%. Since the same quarter one year prior, revenues leaped by 75.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the Consumer Finance industry average, but is less than that of the S&P 500. The net income increased by 19.2% when compared to the same quarter one year prior, going from $19.45 million to $23.18 million.
- The gross profit margin for ENCORE CAPITAL GROUP INC is rather high; currently it is at 66.67%. Regardless of ECPG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.13% trails the industry average.
- The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Consumer Finance industry and the overall market, ENCORE CAPITAL GROUP INC's return on equity is below that of both the industry average and the S&P 500.
- Net operating cash flow has significantly decreased to -$2.59 million or 110.93% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Encore Capital Group, Inc., a specialty finance company, 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. Encore Capital Group has a market cap of $1.11 billion and is part of the financial sector and financial services industry. Shares are down 10.9% year to date as of the close of trading on Monday.
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