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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Encore Capital Group, Inc. (XNAS:ECPG) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
ECPG
Name:
ENCORE CAPITAL GROUP, INC. (XNAS:ECPG)
Sector:
47.45M
Industry:
Mortgage Finance
CEO:
Mr. Ashish Masih
Total Employees:
6,604
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 0.00% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ENCORE CAPITAL GROUP, INC.(ECPG) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND MORTGAGE FINANCE INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
53.47
One Month Price Target:
$53.89
Six Month Price Target :
$55.97
Likely Price in One Year's Time:
Ticker:
$58.46
Likely Trading Range Today Under (Normal Volatility)
$53.17
Price Upper limit ($) :
$53.92
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$49.04
This week:
$43.56
This month :
$33.66
Other Primary facts
Market Cap:
1.28B
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
23.88M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
37.47%
-38.72%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$74.02
$64.51
$32.92
$42.43
Medium risk (<10%) entry points
Buy Call
Sell Call
$61.42
Buy Put:
Sell Put:
$59.39
$45.50
$47.55
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
ECPG
Sharpe Ratio:
3.15%
Comparison:
ECPG, is amongst the top 20% stocks with highest risk-adjusted returns
Sharpe ratio is -33.21% lower than the industry
& ratio is 38.25% higher than the market/S&P 500 average
Average Returns/Yield of
ECPG
Daily returns:
0.14%
Weekly returns:
0.69%
Monthly returns:
2.76%
Yearly returns:
45.31%
Comparison of returns:
Average annual returns/yield (last 3 years) is -26.85% below industry average
Classification:
ECPG, is amongst the top 20% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.43
Statistical test of Returns:
ECPG has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
4.10%
Weekly Volatility:
9.17%
Monthly Volatility:
18.34%
Yearly Volatility:
63.54%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.26%
Volatility in last five trading days has been -93.68% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-8.29%
Weekly VaR:
-18.53%
Monthly VaR:
-37.06%
How Much Can the price of
ECPG
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-31%
Worst case (decline):
>85%
This translates to price declining to:
$36.80
This translates to price declining to:
$8.02
Severe Crash Probability
Risk of crash in next 6/12 months: Very high (>70%)
What is Value at Risk (VaR)?
Risk Fundamentals
ECPG is a 161.53% riskier investment compared to the market/S&P 500 & is 124.05% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 5.56% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
ECPG
Beta in relation to market/S&P 500--1.39
Expected beta in 1 year's time:
1.112
Expected beta in 3 year's time:
1.573
Unlevered (debt free) Beta:
0.625
Beta in relation to Nasdaq (XNAS):
0.521
Beta in relation to all global stocks::
0.756
Beta Comparison & Analysis
Beta of competitors/peers::
0.991
Beta is 40.25% higher than peers
Average Industry Beta:
1.457
Beta is -4.60% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
23.79%
Sustainable growth rate is -93.55% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
0.205
Alpha is -36.38% below industry average alpha yield
Alpha is 1303% higher than market/& is unsustainably high
Analysis of Cost of Capital of
ECPG
Equity cost of capital:
0.127
Equity cost of capital is -3.50% below industry mean WACC
Unlevered (without debt) cost of capital:
5.70%
Before-tax cost of debt:
4.84%
After-tax cost of debt:
3.83%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.83%
WACC is -9.39% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$71.08
Revenue growth rate per share of (3Y):
1.02
Annual revenue growth rate is -94.02% below industry average
EPS:
$14.67
Expected Annual growth rate of EPS (3Y):
27.91%
Expected future EPS growth rate is -59.66% lower than the Mortgage Finance industry
Free cash flow (FCF) per share:
$9.85
-
-
Debt per share
$80.48
EBITDA per share
$30.89
Valuation Analysis Today of
ECPG
P/E Ratio:
3.85
P/E Ratio of Competitors/Peers:
15.67
P/E ratio is -75.42% lower than main peers & is 65.66% higher than the industry
Stock price/value with industry average P/E ratio: $34.11
ECPG is 56.77% overvalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.75
Price to sales ratio is 21.06% above the industry mean
P/B (Price to book value ratio):
1.02
Price to free cash flow: 5.43
Price to free cash flow ratio is 51.58% higher than the industry
Net income growth rate (3Y):
184.45%
Net income growth rate is -256.00% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
154.19%
Net debt to equity ratio:
222.55%
Debt to assets ratio:
41.65%
Net debt to assets ratio:
60.11%
Debt-to-asset ratio is -47.05% below industry average
Ability to repay debt:
Interest coverage ratio:
5.19
Interest coverage ratio is 2388.45% more than industry average
Looking forward:
Debt growth rate:
-8.66%
Annual debt growth is -266% lower than industry average debt growth rate
Debt repayment rate in last quarter: 17.64%
Analysis of Key Statistics
Correlation of price movement with the market:
0.331
Statistical significance of correlation:
ECPG has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.456
Stock price is -27.42% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.456
Correlation of price movement with Nasdaq (^IXIC):
0.003
Covariance of price movement with the market:
0.008
Kurtosis
28.452
Returns have severe fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
0.698
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
ECPG
Gross Profit Margin Ratio:
286%
Operating Profit Margin Ratio:
43.01%
Operating profit margin is 62.88% higher than the industry
Net Profit Margin Ratio:
286%
Effective Tax Rate:
20.78%
Effective tax rate is 43.25% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
34.65%
Return on equity (ROE) is -90.96% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
9.36%
Return on assets (ROA) is 68.08% higher than the industry
Financial Leverage:
1.7x
Current Ratio:
0.17
Current ratio is -69.28% below industry average
Cash Conversion Cycle (days):
693
-
The remaining useful life of property plant & equipment is: 3.8 years
Stock based compensation to net income ratio:
0.91%
In-depth Efficiency Analysis
Revenue generated per employee:
257.0K
Each employee generates -23% less revenue than industry average revenue per employee
EBITDA generated per employee:
111.7K
Each employee generates -46% less EBITDA than industry average revenue per employee
Profit generated per employee:
65.4K
Each employee generates -49% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
7.2K
Each employee generates 596% more free cash flow than industry average revenue per employee
Assets/Capital per employee
666.7K
Each employee generates 596% more free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
ECPG
STOCK YARDS BANCORP, INC. (XNAS:SYBT)
LENDINGTREE, INC. (XNAS:TREE)
FIRST BANCORP (XNAS:FBNC)
BGC PARTNERS, INC. (XNAS:BGCP)
INSTIL BIO, INC. (XNAS:TIL)
NORTHWEST BANCSHARES, INC. (XNAS:NWBI)
GCM Grosvenor Inc. (XNAS:GCMG)
FIRST BUSEY CORPORATION (XNAS:BUSE)
CAPITOL FEDERAL FINANCIAL, INC. (XNAS:CFFN)
Current Analyst Ratings
Strong buy�8%
Buy�13%
Hold�13%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Buy
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
1.70B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
485.23M
1.21B
-
326.22M
326.22M
-
155.92M
482.14M
-
142.08M
50.40M
737.77M
729.97M
431.90M
545.58M
113.40M
431.90M
Statement of Cash Flow
Date:
Period:
11.83M
Differed Income Tax :
2.81M
Stock Based Compensation :
3.92M
Change in Working Capital :
18.47M
Accounts Receivables:
-
Other Working Capital:
51.20M
Other Non-Cash Items:
- 158240.00K
Net Cash Provided by Operating Activities:
54.53M
Investments in PP&E:
- 7079.00K
Net Acquisitions:
-
Purchases of Investments:
- 166298.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
160.22M
-
160.22M
22.55M
-
28.79M
211.55M
182.58M
876.54M
33.44M
3.14B
50.69M
122.19M
4.40B
-
4.61B
-
1.01B
-
-
229.84M
1.24B
1.92B
204.13M
2.13B
-
3.37B
244.00K
1.31B
- 63908.0K
-
March 31, 2022 at 6:00:00 AM
967.37M
1.25B
4.61B
-
2.93B
2.8B
215.31M
- 4842.00K
37.09M
- 411536.00K
-
- 25692.00K
-
319.21M
- 118016.00K
- 3032.00K
- 29428.00K
160.22M
189.65M
54.53M
- 7079.00K
47.45M
Our Proprietary Portfolio Rating
Our Rating:
B
Price Forecast/Expected Price in Next 5 Years of
ECPG
2023
2024
2025
2026
2027
$58.75
$140.07
$153.15
$167.45
$183.09