Last Update04 Jul 25
As I have written before, ECPG is a solid company. But it lacks a sense of urgency and its management appears stuck in the past. The board of ECPG should ask why JCAP, which just went public, has a higher market cap than ECPG? Why has ECPG not integrated AI into its operations, reduced headcount, and increased profitability? If ECPG does not wake up, JCAP will eat its lunch!
The company's ERC-Estimated remaining collections exceeds $5B. Its market capitalization is less than $1B, making its liquidation value more than its trading value. ECPG has stumbled. In its last earnings call, ECPG took a substantial write-down, mostly of goodwill related to its Cabot business. It was a management mistake to take write downs multiple times instead of doing it once and moving on. The failure to write down once and be done creates uncertainty and loss of confidence. Management also repeats its well-worn slogans about its business. This too is a mistake as it makes investors yawn. The company needs to at least discuss any new initiatives in analytics and AI. At a minimum, it should emphasize whatever it spends on R&D so that the market can gain confidence that ECPG is building a fence around its business and is more than a tired and old debt collection company. The company’s lack of urgency makes it an attractive takeover target. Its business is sound, but its management can be improved.
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