fbpx

Continued Success

Stock (Symbol) Stock Price

Portfolio Recovery Assoc. (PRAA)

$95

Data is as of Expected to Report Sector

November 12, 2012

Feb 18

Financial

Sharek’s Take
David SharekPortfolio Recovery Associates (PRAA) popped after reporting solid results two quarters ago. When the company put out equally stout results last quarter the stock barely moved. I think PRAA should be higher. By historical measures this stock should sell for 17 times earnings. Right now the P/E on 2013 EPS is 11. That spells huge upside — but we have to sit and wait.
 
Portfolio Recovery Associates buys defaulted consumer debt for pennies on the dollar and contacts consumers to try to get some of the debt back. It’s a successful model. Profits have grown from around $1 to around $7 since 2002. There’s only been two down years for profits, that was 2008 and 2009 when we were in a recession. Otherwise this si a solid 17% grower.
One-Year Chart
I feel a lot of the problem with the stock is the fact PRAA was scorching during June and July.
 
See that base PRAA made the 1st half of the year? The P/E was around 11 then — same as today’s. When the stock was around $100 the P/E was 14. If PRAA had a 14 P/E today the stock would be $123.
Earnings Table
Profits grew 32% last quarter on a strong 22% rise in sales. 
 
PRAA raised estimates and then beat those estimates last quarter. The company has beaten handily for three straight quarters.
 
Annual Profit Estimates increased but not at the rate they did last quarter. 2014’s est. has gone from $9.05 to $9.86 during the last six months.
  
Quarterly estimates look solid for the next two quarters. These figures are growing so the 3QtrsOut and 4QtrsOutEst need time.
Fair Value
This stock is worth $150. If it gets half-way-there it would be a good investment for us.
Ten-Year Chart
I love this ten-year chart. The stock has been volatile during the decade but has always been able to hit new highs. Notice the stock’s grown at 18% a year during the decade. That’s a good return. Still, profits have grown faster. That tells me the stock has some catching up to do.
Power Ranking Bottom Line
Growth Portfolio

9 of 17

Everything here tells me PRAA is having continued success and the stock has some catching up to do. With PRAA around $100, the stock could rise 50% in the next twelve months. 
 
PRAA is ranked 9th in the 17 stock Growth Portfolio Power Rankings. It’s not in the Aggressive Growth Portfolio but I would consider adding it if the stock were to dip.
Aggressive Growth Portfolio

N/A

Leave a Comment

Your email address will not be published. Required fields are marked *

Not a member? Sign up here for $25 a month.