Encore Capital Group (ECPG): Assessing Valuation After Recent Share Price Rebound

Encore Capital Group (ECPG) has been catching the eye of some investors recently, driven by its unique position in the debt management space. Looking over the past month, ECPG shares have pulled back slightly, but recent 3-month gains hint at underlying momentum.

See our latest analysis for Encore Capital Group.

Encore Capital Group’s share price has rebounded more than 12% over the past 90 days, a strong contrast to its weak start this year. However, the 1-year total shareholder return remains modestly down. That recent momentum suggests shifting investor sentiment, potentially reflecting renewed confidence or changing risk perceptions around the company’s prospects.

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With Encore’s recent bounce and a sizeable gap between its share price and analyst targets, investors now face the classic dilemma: is ECPG trading at a genuine discount, or has the market already priced in its recovery potential?

Most Popular Narrative: 23% Undervalued

At $44.07, Encore Capital Group’s share price sits well below the most widely followed fair value calculation, which projects potential upside if key assumptions hold true. Bulls point to a disconnect between projected earnings power and the current market skepticism, setting up a major valuation debate.

The combination of rising U.S. consumer credit card balances and elevated charge-off rates is fueling a sustained increase in the supply of non-performing loans available for purchase at attractive prices. This is expected to drive continued record levels of portfolio purchases and revenue growth. Increased investment in digital collections channels and operational innovation is delivering higher-than-forecast collection rates, with actual recoveries exceeding estimates. This supports improvements to both net margins and earnings.

Read the complete narrative.

What’s creating all this excitement among followers of the latest narrative? The answer lies in a future growth trajectory defined by dramatic margin expansion, a profitability comeback, and some audacious forecasts for where this business is headed. If you’re curious about the real drivers behind that bullish price target, it’s time to see how bold these numbers really get.

Result: Fair Value of $57.25 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if U.S. consumer behavior improves or regulatory pressures tighten, Encore’s anticipated loan supply and portfolio growth could easily slow.

Find out about the key risks to this Encore Capital Group narrative.

Build Your Own Encore Capital Group Narrative

If you have your own take on Encore Capital Group’s story or want to dig deeper into the numbers, crafting a narrative is quick and easy. See for yourself: Do it your way

A great starting point for your Encore Capital Group research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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