Can Encore Capital's Raised 2026 Outlook Drive More Earnings Growth?

Encore Capital Raises the Bar for 2026

Encore now expects 2026 earnings of $13-$14 per share, up from its prior projection of about $13. The new range signals greater confidence in full-year performance after the first half.

The guidance includes $1 per share of refinancing costs absorbed in the second quarter. That makes the increase more notable because the higher range already incorporates the refinancing-related earnings drag.

The Zacks Consensus Estimate points to a clear earnings step-up. Earnings are projected to increase from $10.91 per share in 2025 to $13.52 in 2026 and $14.64 in 2027.

Earnings Estimates

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Estimate revisions add to that momentum. The current year earnings estimate has increased 3.9% over the past four weeks, suggesting analysts have become more constructive as collections and portfolio revenues improve.

Earnings Estimate Revision Trend

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ECPG's Collections Outlook Moves Higher

Management raised 2026 global collections guidance to $2.80-$2.85 billion, implying growth of 8%-10% year over year. The prior outlook called for about $2.8 billion, or 8% growth.

Second-quarter global collections rose 13% to a record $737 million. The result followed strong first-half execution and supports the view that recent portfolio purchases and collection improvements are translating into higher collections.

Driven by this momentum, the Zacks Consensus Estimate for sales reflects a year-over-year rise of 8.9% in 2026 and 2.1% in 2027.

Sales Estimates

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Encore Capital's Refinancing Adds a Funding Tailwind

Encore's May refinancing is expected to save about $15 million in annual interest expense. Lower financing costs can provide earnings support as the company continues deploying capital into receivable portfolios.

The benefit comes with an important offset. Encore expects 2026 interest expense, including other income, of about $295 million, underscoring the funding sensitivity of a business that relies on borrowings to finance portfolio purchases.

ECPG's U.S. Supply Supports Portfolio Deployment

Encore maintained its 2026 portfolio purchase outlook of $1.4-$1.5 billion. Management continues to see favorable U.S. supply, supported by elevated revolving credit balances and charge-offs, while Midland Credit Management's scale, analytics and collection capabilities help it target attractive returns.

PRA Group, Inc. PRAA, another buyer and collector of nonperforming loan portfolios, said second-quarter 2026 portfolio income increased 7% to $267.8 million, driven by strong recent purchases at improved returns. Capital One Financial Corporation COF, a major U.S. card lender, reports delinquency and charge-off trends that provide another read on the consumer-credit backdrop influencing future debt-sale supply.

Encore Capital Still Faces Cost and Leverage Risks

Legal collection expenses increased 25.8% year over year in the first half of 2026. If collections growth slows, that faster-growing cost line could pressure operating leverage and cash efficiency.

Borrowings reached $4.18 billion at June 30, 2026. The company also remains heavily dependent on U.S. conditions, with Midland Credit Management accounting for 85.2% of first-half global portfolio purchasing dollars. Higher funding costs or weaker U.S. collections could therefore make the raised outlook harder to achieve.

How ECPG's Ratings Fit the Raised Outlook

The bottom line is that the raised outlook strengthens near-term earnings visibility, but execution still matters. ECPG currently carries a Zacks Rank #1 (Strong Buy), which is supportive of the stock's near-term earnings-revision picture. Like Encore Capital, PRA Group also sports a Zacks Rank #1, while Capital One carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

Its Style Scores are mixed. ECPG has a Value Score of B, Growth Score of F, Momentum Score of C and VGM Score of F. The favorable Value Score complements the top Zacks Rank, while the weaker Growth and VGM Scores argue for monitoring whether improved guidance translates into durable growth rather than assuming the outlook upgrade settles the investment case.

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This article originally published on Zacks Investment Research (zacks.com).

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