| Stock (Symbol) | Stock Price | |
Portfolio Recovery Assoc. (PRAA) |
$53 |
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| Data is as of | Expected to Report | Sector |
May 23, 2013 |
Jul 28 – Aug 01 |
Finance |
| Sharek’s Take | ||
 Portfolio Recovery Associates is taking one step back to take two steps forward. The company recently purchased Aktiv Capital, a bad-loan recovery company in Norway, and this will hurt profits the next two quarters, but boost profits thereafter. The deal hurt last qtr’s profits by 5 cents, and if it wasn’t for that PRAA would have clocked 21% profit growth instead of 15%. PRAA is selling at a discount right now, and this is a good time for long-term investors to buy in. Profit growth is expected to accelerate past 20% later this year. |
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| One-Year Chart | ||
 Surprising the stock sells for only 13 times earnings when the long-term growth rate is 18%. I have my Fair Value on the stock at 17 times earnings. It’s clear to see here Estimates are poor, but I like the Annual Profit history. Only blemishes were during the recession. |
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| Earnings Table | ||
 Profit growth was only 15% last qtr on revenue growth of 14%. Cash collections were up 14%, down from 22% 2QtrsAgo.PRAA missed estimates by three cents, and its now been six months since PRAA beat by a lot. When I originally bought the stock in August 2012 it had just beat by 23 cents, and upped the next qtr’s est b 19 cents. Annual Profit Estimates came down a little. Surprising that 2015/2016 didn’t rise. Quarterly profit growth estimates tell the story of PRAA’s situation this quarter. |
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| Fair Value | ||
 I’m also surprised that this stock doesn’t get more respect. In the ten-year chart below you can see both the stock and profits have grown at least 20% a year for a decade, yet PRAA has had a P/E in the lot-teens since 2008. Should go back up to 17. |
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| Ten-Year Chart | ||
 Here its easy to see the effects of the recession in both the stock price and profits. Swift rebound after that. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
12 of 25 |
Portfolio Recovery Associates has a couple slow profit growth quarters ahead, and that’s zapping momentum. This stock is a great buy for long-term investors with 51% upside to next year’s Fair Value. PRAA is ranked 12th in the 25 stock Growth Portfolio Power Rankings and 11th in the 12 stock Aggressive Growth Portfolio Power Rankings. |
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Aggressive Growth Portfolio
11 of 12 |
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