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Relative valuation derived from Financials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 25GRADE F
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
26.3%
Sector: 8.5%
Dividend Analysis audit
No Dividend
This company does not currently pay a dividend.
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, ENCORE CAPITAL GROUP INC (ECPG) receives a "Hold" rating with a composite score of 44.0/100, ranked #997 out of 4446 stocks. Key factor scores: Quality 25/100, Value 47/100, Momentum 72/100. This is quantitative analysis only — not investment advice.
ENCORE CAPITAL GROUP INC (ECPG) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does ENCORE CAPITAL GROUP INC Do?
Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services, as well as debt servicing and other portfolio management services to credit originator for non-performing loans. The company was incorporated in 1999 and is headquartered in San Diego, California. ENCORE CAPITAL GROUP INC (ECPG) is classified as a small-cap stock in the Financials sector, specifically within the Banking industry. The company is led by CEO Ashish Masih and employs approximately 6,900 people, headquartered in San Diego, California. With a market capitalization of $1.5B, ECPG is one of the notable companies in the Financials sector.
ENCORE CAPITAL GROUP INC (ECPG) Stock Rating — Hold (April 2026)
As of April 2026, ENCORE CAPITAL GROUP INC receives a Hold rating with a composite score of 44.0/100 and 3 out of 5 stars from the Blank Capital Research quantitative model.ECPG ranks #997 out of 4,446 stocks in our coverage universe. Within the Financials sector, ENCORE CAPITAL GROUP INC ranks #306 of 891 stocks, placing it in the upper half of its Financials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
ECPG Stock Price and 52-Week Range
ENCORE CAPITAL GROUP INC (ECPG) currently trades at $75.43. The stock lost $0.93 (1.2%) in the most recent trading session. The 52-week high for ECPG is $74.58, which means the stock is currently trading 1.1% from its annual peak. The 52-week low is $26.45, putting the stock 185.2% above its annual trough. Recent trading volume was 211K shares, suggesting relatively thin trading activity.
Is ECPG Overvalued or Undervalued? — Valuation Analysis
ENCORE CAPITAL GROUP INC (ECPG) carries a value factor score of 47/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 6.15x, compared to the Financials sector average of 14.88x — a discount of 59%. The price-to-book ratio stands at 1.47x, versus the sector average of 1.22x. The price-to-sales ratio is 1.01x, compared to 0.90x for the average Financials stock. On an enterprise value basis, ECPG trades at 2.41x EV/EBITDA, versus 3.26x for the sector. The EV/EBIT multiple is 8.40x.
Overall, ECPG's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
ENCORE CAPITAL GROUP INC Profitability — ROE, Margins, and Quality Score
ENCORE CAPITAL GROUP INC (ECPG) earns a quality factor score of 25/100, signaling below-average profitability metrics relative to the broader market. The return on equity (ROE) is 26.3%, compared to the Financials sector average of 8.5%, which demonstrates strong shareholder value creation. Return on assets (ROA) comes in at 4.8% versus the sector average of 1.2%.
On a margin basis, ENCORE CAPITAL GROUP INC reports gross margins of 55.6%. The operating margin is 42.5% (sector: 21.8%). Net profit margin stands at 17.6%, versus 17.7% for the average Financials stock. Revenue growth is running at -27.9% on a trailing basis, compared to 9.4% for the sector. Profitability is below benchmark levels, which may reflect industry headwinds, elevated reinvestment, or structural challenges.
ECPG Debt, Balance Sheet, and Financial Health
ENCORE CAPITAL GROUP INC has a debt-to-equity ratio of 447.0%, compared to the Financials sector average of 121.0%. This elevated leverage warrants close monitoring, as it increases the company's sensitivity to rising interest rates and economic downturns. The current ratio is 0.68x, which may signal near-term liquidity tightness. Total debt on the balance sheet is $4.00B. Cash and equivalents stand at $157M.
ECPG has a beta of 0.96, meaning it is roughly in line with the broader market in terms of price volatility. The stability factor score for ENCORE CAPITAL GROUP INC is 55/100, reflecting average volatility within the normal range for its sector.
ENCORE CAPITAL GROUP INC Revenue and Earnings History — Quarterly Trend
In TTM 2026, ENCORE CAPITAL GROUP INC reported revenue of $1.56B and earnings per share (EPS) of $3.32. Net income for the quarter was $257M. Gross margin was 55.6%. Operating income came in at $453M.
In Q4 2025, ENCORE CAPITAL GROUP INC reported revenue of $265M. Net income for the quarter was $77M. Gross margin was 55.6%.
In FY 2025, ENCORE CAPITAL GROUP INC reported revenue of $1.77B and earnings per share (EPS) of $11.05. Net income for the quarter was $257M. Operating income came in at $627M.
In Q3YTD 2025, ENCORE CAPITAL GROUP INC reported revenue of $1.30B. Net income for the quarter was $180M. Gross margin was 73.7%.
Over the past 8 quarters, ENCORE CAPITAL GROUP INC has demonstrated a growth trajectory, with revenue expanding from $1.46B to $1.56B. Investors analyzing ECPG stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
ECPG Dividend Yield and Income Analysis
ENCORE CAPITAL GROUP INC (ECPG) does not currently pay a dividend. This is common among smaller companies in the Banking industry that prefer to reinvest cash flows into business expansion rather than returning capital to shareholders. Income-focused investors looking for Financials dividend stocks may want to explore other Financials stocks or use the stock screener to filter by dividend yield.
ECPG Momentum and Technical Analysis Profile
ENCORE CAPITAL GROUP INC (ECPG) has a momentum factor score of 72/100, indicating strong price momentum with the stock outperforming the majority of the market over recent periods. Stocks with high momentum scores have historically tended to continue their outperformance in the near term. The investment factor score is 38/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 22/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
ECPG vs Competitors — Financials Sector Ranking and Peer Comparison
Comparing ECPG against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full ECPG vs S&P 500 (SPY) comparison to assess how ENCORE CAPITAL GROUP INC stacks up against the broader market across all factor dimensions.
ECPG Next Earnings Date
No upcoming earnings date has been announced for ENCORE CAPITAL GROUP INC (ECPG) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy ECPG? — Investment Thesis Summary
ENCORE CAPITAL GROUP INC presents a balanced picture with arguments on both sides. The quality score of 25/100 flags below-average profitability. Price momentum is positive at 72/100, suggesting the trend favors buyers.
In summary, ENCORE CAPITAL GROUP INC (ECPG) earns a Hold rating with a composite score of 44.0/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on ECPG stock.
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Institutional Research Dossier
ENCORE CAPITAL GROUP INC (ECPG) Deep Dive Analysis
Published on March 24, 2026
Action RatingHold
Sections
Executive Summary
Encore Capital Group (ECPG) receives a Hold rating, reflecting a balanced view of its attractive valuation metrics against a backdrop of declining revenue and significant debt. While the company's profitability ratios, such as ROE, and valuation multiples, like P/E and EV/EBITDA, appear compelling relative to the Financials sector, the substantial debt burden and recent revenue contraction raise concerns about long-term sustainability and growth potential.
The company's business model, focused on purchasing and recovering defaulted consumer receivables, is inherently cyclical and sensitive to macroeconomic conditions. The Hold rating acknowledges the potential for upside given the discounted valuation, but also recognizes the considerable risks associated with its financial leverage and the volatile nature of its revenue streams. Investors should closely monitor the company's ability to manage its debt and stabilize revenue growth before considering a more bullish stance.
Business Strategy & Overview
Encore Capital Group operates within the specialty finance industry, focusing on the acquisition and management of defaulted consumer debt portfolios. The company's core strategy involves purchasing these portfolios at a significant discount to their face value and then employing various collection methods to recover outstanding balances. This includes direct engagement with consumers to establish repayment plans and, in some cases, legal action. The profitability of this model hinges on Encore's ability to accurately assess the collectability of acquired debt and efficiently manage the recovery process.
Beyond its core debt purchasing and collection activities, Encore also provides related services such as early-stage collections, business process outsourcing, and contingent collection services to credit originators. These services offer a more stable revenue stream compared to the inherently volatile debt purchasing business. However, the company's primary focus remains on acquiring and recovering defaulted debt, which exposes it to fluctuations in consumer credit quality and macroeconomic conditions.
Encore's strategic positioning within the industry is characterized by its scale and experience in managing large portfolios of defaulted debt. The company has established relationships with major credit originators, providing access to a consistent supply of debt portfolios for acquisition. Furthermore, Encore's sophisticated data analytics and collection infrastructure enable it to optimize recovery rates and maximize profitability. However, the industry is becoming increasingly competitive, with new entrants and established players vying for a share of the defaulted debt market.
The company's revenue is directly tied to the volume of debt it purchases and the effectiveness of its collection efforts. A key aspect of Encore's strategy is its capital allocation decisions, specifically how it deploys capital to acquire new debt portfolios. The company must carefully balance the potential returns from these investments against the associated risks, including the possibility of lower-than-expected recovery rates or increased regulatory scrutiny. The recent revenue decline of -27.9% compared to the sector's growth of 9.3% is a significant concern, indicating potential challenges in acquiring profitable debt portfolios or effectively managing existing ones.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
-27.9%
Sector: 9.4%
-397% VS SCTR
Economic Moat Analysis
Encore Capital Group's economic moat is best characterized as Narrow. While the company possesses certain advantages within the debt purchasing and collection industry, these advantages are not substantial enough to create a wide and sustainable competitive edge. The primary source of Encore's narrow moat stems from its efficient scale and intangible assets in the form of data and analytics.
The debt purchasing and collection industry exhibits characteristics of efficient scale, where a limited number of large players can operate more efficiently than smaller competitors. Encore's size allows it to spread its fixed costs over a larger portfolio of debt, resulting in lower operating costs per dollar of debt recovered. This scale advantage also enables Encore to invest in sophisticated data analytics and collection infrastructure, further enhancing its efficiency and profitability.
Encore's data and analytics capabilities represent another source of its narrow moat. The company has accumulated a vast amount of data on consumer debt repayment patterns, which it uses to refine its debt valuation models and collection strategies. This proprietary data provides Encore with an informational advantage over competitors, allowing it to more accurately assess the collectability of debt portfolios and optimize its collection efforts. However, this advantage is not insurmountable, as other players in the industry are also investing in data analytics and developing their own proprietary models.
The absence of strong network effects or high switching costs limits the width of Encore's moat. Consumers have no inherent loyalty to debt collectors, and there are no significant barriers preventing them from switching to a different repayment plan or negotiating with a different collection agency. Furthermore, the debt purchasing industry is relatively fragmented, with numerous players competing for a share of the market. This intense competition limits Encore's pricing power and reduces its ability to generate consistently high returns.
While Encore's scale and data analytics provide it with a competitive edge, these advantages are not strong enough to create a wide and sustainable moat. The company's profitability is still highly sensitive to macroeconomic conditions and regulatory changes, and it faces ongoing competition from other players in the industry. Therefore, a Narrow moat rating is warranted, reflecting the company's limited ability to generate consistently superior returns over the long term.
Financial Health & Profitability
Encore Capital Group's financial health presents a mixed picture. While certain profitability metrics appear strong, the company's high debt levels and recent revenue decline raise concerns about its long-term financial stability. The company's ROE of 26.3% significantly exceeds the sector average of 8.5%, indicating efficient use of equity. Similarly, the operating margin of 42.5% is substantially higher than the sector average of 22.0%, suggesting strong operational efficiency. However, these positive metrics are overshadowed by the company's high debt-to-equity ratio and declining revenue.
The company's debt-to-equity ratio of 447.00 is significantly higher than the sector average of 115.00, indicating a high degree of financial leverage. This high debt burden increases the company's vulnerability to economic downturns and rising interest rates. The company's ability to service its debt obligations will be a critical factor in its long-term financial health. The substantial total debt of $4.00B against a cash balance of only $156.78M is a cause for concern.
The recent revenue decline of -27.9% compared to the sector's growth of 9.3% is a significant red flag. This decline suggests potential challenges in acquiring profitable debt portfolios or effectively managing existing ones. The quarterly financial history reveals a volatile revenue trend, with significant fluctuations in net income and free cash flow. The most recent quarter (Q4 FY2025) shows a revenue of $264.78M and a net income of $76.66M, but a concerning free cash flow of $-445.15M. This negative free cash flow raises questions about the company's ability to generate sufficient cash to fund its operations and service its debt.
Analyzing the quarterly trends, the FY2024 results show a net loss of $-139.24M, highlighting the volatility in the company's earnings. While FY2025 shows a net income of $256.83M, the inconsistent free cash flow generation remains a concern. The company's ability to stabilize revenue growth and generate consistent positive free cash flow will be crucial for improving its financial health and reducing its reliance on debt financing.
The negative free cash flow figures observed across multiple quarters, including a particularly large negative value in Q3TTM FY2025 ($-870.66M), warrant close scrutiny. This suggests that the company is consuming cash at an unsustainable rate, potentially requiring additional debt financing or asset sales to meet its obligations. The current ratio is not available, which further limits the assessment of the company's short-term liquidity. However, given the high debt levels and negative free cash flow, liquidity could be a potential concern.
Valuation Assessment
Encore Capital Group's valuation presents a seemingly attractive picture based on several key metrics. The company's P/E ratio of 5.7x is significantly lower than the sector average of 15.5x, suggesting that the stock is undervalued relative to its earnings. Similarly, the EV/EBITDA ratio of 2.0x is also substantially lower than the sector average of 3.5x, further indicating a potential undervaluation. However, these low multiples must be considered in the context of the company's declining revenue, high debt levels, and volatile earnings.
While the low P/E and EV/EBITDA ratios may appear enticing, they could be reflecting the market's concerns about the company's long-term growth prospects and financial stability. The company's recent revenue decline of -27.9% raises questions about its ability to sustain its current earnings levels. Furthermore, the high debt-to-equity ratio of 447.00 increases the company's financial risk and could limit its future growth potential. Therefore, a discounted valuation may be warranted to compensate investors for these risks.
The company's free cash flow is a significant concern. The TTM free cash flow is $-445.15M. This negative free cash flow suggests that the company is not generating enough cash to fund its operations and service its debt obligations. This could put pressure on the company to raise additional capital, potentially diluting existing shareholders or increasing its debt burden. A negative free cash flow yield further reinforces the concerns about the company's cash generation capabilities.
Considering the company's declining revenue, high debt levels, and negative free cash flow, the seemingly attractive valuation multiples may be misleading. The market may be discounting the stock to reflect the significant risks associated with the company's financial health and growth prospects. While the stock may offer some upside potential if the company can successfully turn around its revenue decline and improve its cash flow generation, the risks are substantial. Therefore, a cautious approach to valuation is warranted.
A more nuanced valuation approach would involve considering the company's normalized earnings power, adjusted for its high debt levels and cyclical nature of its business. A discounted cash flow (DCF) analysis, incorporating conservative growth assumptions and a high discount rate to reflect the company's risk profile, would provide a more realistic assessment of its intrinsic value. Based on the available data and the identified risks, the current valuation appears to be fair, but not significantly undervalued. The Hold rating reflects this balanced view.
Risk & Uncertainty
Encore Capital Group faces several specific risks that could negatively impact its business and financial performance. One of the most significant risks is regulatory scrutiny. The debt collection industry is subject to extensive regulation at both the federal and state levels, and changes in these regulations could significantly impact Encore's ability to collect debts and generate revenue. Increased regulatory enforcement or stricter consumer protection laws could lead to higher compliance costs and lower recovery rates.
Another key risk is macroeconomic conditions. The demand for debt purchasing and collection services is highly correlated with the overall health of the economy. During economic downturns, consumer debt levels tend to rise, leading to an increase in the supply of defaulted debt available for purchase. However, economic downturns also make it more difficult for consumers to repay their debts, potentially leading to lower recovery rates for Encore. A prolonged economic recession could significantly impact the company's profitability.
Competition within the debt purchasing and collection industry is also a significant risk. The industry is relatively fragmented, with numerous players competing for a share of the market. Increased competition could lead to lower debt purchasing prices and higher collection costs, squeezing Encore's profit margins. The company faces competition from both large, established players and smaller, regional firms.
The company's high debt levels represent another significant risk. Encore's debt-to-equity ratio of 447.00 is significantly higher than the sector average, increasing its vulnerability to rising interest rates and economic downturns. The company's ability to service its debt obligations will be a critical factor in its long-term financial health. A significant increase in interest rates or a decline in revenue could put pressure on the company's cash flow and potentially lead to financial distress.
Bulls Say / Bears Say
The Bull Case
BULL VIEWEncore's low P/E and EV/EBITDA ratios suggest the stock is deeply undervalued, offering substantial upside potential as the market recognizes its true earnings power.
BULL VIEWThe company's strong ROE indicates efficient capital allocation, positioning it to generate superior returns as it navigates the cyclical nature of the debt purchasing market.
The Bear Case
BEAR VIEWEncore's high debt levels and negative free cash flow raise serious concerns about its financial stability, making it vulnerable to economic downturns and rising interest rates.
BEAR VIEWThe company's declining revenue signals potential challenges in acquiring profitable debt portfolios, suggesting its business model is facing headwinds and its competitive position is weakening.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score ECPG and 4,400+ other equities.
ENCORE CAPITAL GROUP INC exhibits a 13% valuation discount relative to institutional benchmarks. This represents a constructive entry window based on current multiples.
Return on Assets
Efficiency of asset utilization
4.8%
Sector: 1.2%
Gross Margin
Pricing power and cost efficiency
55.6%
Sector: 0.0%
Operating Margin
Core business profitability
42.5%
Sector: 21.8%
Net Margin
Bottom-line profitability
17.6%
Sector: 17.7%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
