Portfolio Recovery Associates Inc. (NASDAQ: PRAA) just proved how being a debt collector can be beneficial. The company beat earnings Tuesday by posting $0.80 EPS versus $0.77 estimates out of First Call. It took this even further by announcing a 1 million share buyback and a $1.00 special dividend. If you look at what the company does, the "Recovery" says it all: provides outsourced receivables management and related services; purchases, collects, and manages portfolios of defaulted consumer receivables and accounts receivable; receivables are the unpaid obligations of individuals to banks, credit unions, consumer and auto finance companies, and retail merchants; provides various collection services, including collateral-location services for credit originators, fee-based collections, and audit and debt discovery/recovery services for government. On March 13 the stock was $43.53. It closed Tuesday at $48.80 in regular trading and went up to $50.02 in after hours. If the bill collectors can't make money off the people walking away from obligations without being flat broke, then who can?
Asset Acceptance Capital Corp. (NASDAQ: AACC) was one of the others also noted at the time. On that date the shares were at $15.08, and they closed today at $16.14. After the close Tuesday it also issued some positive "shareholder-friendly" news that it plans to return $150 million to shareholders via a share buyback and a special cash dividend. Shares traded up 11.52% to $18.00 in after hours.
Encore Capital (NASDAQ: ECPG) has also traded up as a J.C.Flowers-led private equity group just took a 25% stake in the company on Monday. Back on March 13 its shares were at $9.40. Shares closed Monday at $11.50, and up to $12.18 on Tuesday.
These are all companies that actually benefit from a slowdown that causes mild pain to Joe Q. Consumer, but they won't do well if all of a sudden things go from slowing to "outright bad" in the economy.
Jon Ogg is a partner at 24/7 Wall St.; he does not own securities in the companies he covers.
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Reader Comments (Page 1 of 1)
6-03-2007 @ 12:04PM
richard said...
ya it great to b a debt collector you spank us that cant pay lol