Yahoo Finance PRA Group (PRAA) Q4 Earnings Beat on a Declining Expense Base
PRA Group, Inc. PRAA reported fourth-quarter 2022 earnings per share (EPS) of 41 cents, which beat the Zacks Consensus Estimate by a whopping 51.9% and our estimate of 22 cents. However, the bottom line plunged 48.1% year over year.
Total revenues of $222.9 million dropped 13.3% year over year. Yet, the top line beat our estimate of $210.2 million.
The quarterly results benefited from a declining expense level. However, the upside was partly offset by reduced portfolio income and softer cash collections.
PRA Group, Inc. Price, Consensus and EPS Surprise
PRA Group, Inc. price-consensus-eps-surprise-chart | PRA Group, Inc. Quote
Quarterly Operational Update
Cash collection of PRA Group decreased 17.3% year over year to $391.7 million in the quarter under review due to a 34.1% year-over-year decrease in U.S. call center and other cash collections as well as an 11.8% decline in Europe cash collections. Moreover, the figure lagged the Zacks Consensus Estimate of $402 million and our estimate of $420.5 million.
The portfolio income of $184.9 million fell 12.6% year over year but surpassed the consensus mark of $172 million and our estimate of $167.2 million. Other revenues tumbled 21.9% year over year to $3.8 million, higher than the Zacks Consensus Estimate of $1.5 million and our estimate of $1.8 million.
Total operating expenses slipped 6.3% year over year to $163.5 million in the fourth quarter but remained higher than our estimate of $159.7 million. The decline in the metric came on the back of a 24.3% decline in other operating expenses and a 5.2% decrease in compensation and employee services.
PRAA purchased nonperforming loan portfolios of $288.1 million in the quarter under review. The cash efficiency ratio decreased 490 basis points year over year to 58.6%. The estimated remaining collections totaled $5,699.7 million at the fourth-quarter end.
Financial Update (as of Dec 31, 2022)
PRA Group exited the fourth quarter with cash and cash equivalents of $83.4 million, which fell 4.8% from the figure in 2021 end. PRAA had $1.6 billion remaining under its credit facilities at the fourth-quarter end.
Total assets of $4,175.7 million slid 4.4% from the 2021-end level.
Borrowings declined 4.4% from the figure as of Dec 31, 2021 to $2,494.9 million. Total equity of $1,286.8 million decreased 2.9% from the 2021-end level.
Full-Year Update
PRA Group’s EPS of $2.94 dropped 27.2% year over year in 2022. Total revenues fell 11.8% year over year to $966.5 million.
Cash collection amounted to $1,729.1 million tumbling 16.1% year over year. Portfolio income of $772.3 million declined 11.8% year over year in 2022.
PRAA bought back shares worth $99.4 million in 2022.
Outlook
Management expects an increase in U.S. card balances, delinquency rates, charge-off rates and bank loan loss reserves that will result in an increased portfolio supply in the days ahead. It also remains optimistic about its healthy purchase levels in Europe.
Zacks Rank
PRA Group currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Other Finance Sector Releases
Of the other Finance sector players that have reported fourth-quarter results so far, the bottom lines of Synchrony Financial SYF, State Street Corporation STT and Discover Financial Services DFS beat the Zacks Consensus Estimate.
Synchrony Financial reported fourth-quarter 2022 adjusted EPS of $1.26, which outpaced the Zacks Consensus Estimate by 12.5%. However, the bottom line dropped nearly 15% year over year. The net interest income of SYF amounted to $4,106 million, which improved 7.2% year over year. The top line beat the consensus mark by 1.7%. Other income of Synchrony Financial plunged 82% year over year to $30 million in the fourth quarter. Total loan receivables of SYF were $92.5 billion, which rose 14.5% year over year.
State Street’s fourth-quarter 2022 adjusted earnings of $2.07 per share outpaced the Zacks Consensus Estimate of $2.00. The bottom line was 3.5% higher than the prior-year level. Quarterly total revenues were $3.16 billion, increasing 3.3% year over year. Also, the top line surpassed the Zacks Consensus Estimate of $3.06 billion. Net interest revenues of STT were $791 million, jumping 63.4% year over year. The net interest margin (NIM) rose 56 basis points year over year to 1.29%.
Discover Financial reported fourth-quarter 2022 adjusted earnings of $3.77 per share, which outpaced the Zacks Consensus Estimate of $3.58 by 5.3%. The bottom line improved 4% year over year. Revenues — net of interest expenses — of DFS amounted to $3,732 million, which rose 27% year over year. The top line outpaced the consensus mark of $3,649 million. DFS reported a net income of $1,033 million, down 3% year over year. Operating efficiency (total operating expense divided by revenues, net of interest expense) came in at 40%, which deteriorated 470 basis points year over year in the fourth quarter.
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