Encore Capital Group’s third quarter saw strong positive momentum, with revenue and profit surpassing Wall Street’s expectations and the stock responding with a significant gain. Management attributed the outperformance to record collections, particularly within its U.S. Midland Credit Management (MCM) business, supported by elevated portfolio purchases and advancements in digital and operational strategies. CEO Ashish Masih highlighted that these enhancements enabled Encore to reach more consumers and improve payment rates, stating, "The collections overperformance in the U.S. was driven by deployment of new technologies, enhanced digital capabilities and continued operational innovation."
Is now the time to buy ECPG? Find out in our full research report (it’s free for active Edge members).
Encore Capital Group (ECPG) Q3 CY2025 Highlights:
- Revenue: $460.4 million vs analyst estimates of $411.3 million (25.4% year-on-year growth, 11.9% beat)
- Adjusted EPS: $3.18 vs analyst estimates of $1.59 (significant beat)
- Adjusted EBITDA: $180.3 million vs analyst estimates of $127.4 million (39.2% margin, 41.6% beat)
- Operating Margin: 37.6%, up from 28.9% in the same quarter last year
- Market Capitalization: $1.11 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Encore Capital Group’s Q3 Earnings Call
- John Rowan (Janney Montgomery Scott) pressed for clarity on fourth quarter purchasing volumes; CEO Ashish Masih reiterated that U.S. market supply remains robust and that purchasing is expected to exceed guidance, but exact quarterly figures are variable.
- Mark Hughes (Truist) probed the impact and implementation of new technologies on collections; Masih explained these tools have mostly benefited recent portfolio vintages and are still being rolled out, with further operational upside anticipated.
- Unknown Analyst (Northland Capital Markets) asked about consumer payment behavior in a challenging macro backdrop; Masih responded that Encore has seen stable repayment patterns and no major deterioration in payer conversion or plan resilience.
- Zachary Oster (Citizens Capital Markets) inquired about the pace and sustainability of share buybacks; Masih confirmed the program remains subject to liquidity and capital needs, but recent increases reflect management’s confidence in future performance.
- Robert Dodd (Raymond James) questioned the sustainability of collections overperformance and whether it would be reflected in future forecasts; Masih acknowledged that while recent gains are being driven by operational improvements, it will take time for these to fully adjust collection curves.
Catalysts in Upcoming Quarters
In the coming quarters, our analysts will watch (1) the pace and consistency of U.S. portfolio purchases amid evolving supply and pricing conditions, (2) evidence that technology-driven collection enhancements continue to support above-average recovery rates, and (3) the company’s ability to maintain operating leverage while executing on share repurchases and managing its capital structure. The trajectory of consumer repayment behavior will also be a key indicator for future performance.
Encore Capital Group currently trades at $50.68, up from $42.82 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free for active Edge members).
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