ECPG Q2 Earnings Miss Despite Y/Y Revenue Growth & Record Collections

Net income increased 9% year over year to $64 million.

ECPG’s Revenues Improve, Expenses Rise

Quarterly revenues of $491.9 million surpassed the Zacks Consensus Estimate of $462.1 million. The top line increased 11% from the prior-year quarter.

Total debt purchasing revenues increased 13.1% from the prior-year quarter to $471.4 million. However, servicing revenues and other revenues declined 18.3% and 25%, respectively.

Total operating expenses increased 4.7% from the prior-year quarter to $305 million. The rise was due to an increase in salaries and employee benefits costs, and cost of legal collections. 

Total global portfolio purchases were $443.8 million, up 20.9% year over year. The increase in portfolio purchases was driven by strong purchasing activity across both Midland Credit Management, or MCM (U.S.), and Cabot Credit Management (Europe) businesses as market supply remained favorable and the company continued to deploy capital into attractive portfolios.

MCM portfolio purchases were $372.3 million in the quarter, up 17.3%. This represented ECPG’s strongest U.S. purchasing quarter. Cabot posted portfolio purchases of $71.5 million, up 43.5% year over year.

Global collections from purchased receivables increased 13% year over year to a record $737 million. MCM collections rose 16.6% to $571.9 million. The Cabot Credit Management collections were $164.3 million, up marginally from the prior-year quarter.

ECPG’s Balance Sheet Strong

As of June 30, 2026, Encore Capital had total assets worth $5.57 billion, up from $5.34 billion as of Dec. 31, 2025. The cash and cash equivalents balance was $182.9 million, up from $156.8 million at the end of 2025.

Borrowings were $4.18 billion as of June 30, 2026, while stockholders’ equity was $1.08 billion.

ECPG’s Share Repurchase Update

In the quarter, the company repurchased approximately $27 million in shares.

2026 Outlook

Given the strong first-half results, management raised its global collections guidance. It expects collections in 2026 to increase 8-10% year over year to $2.8-$2.85 billion.

The company also raised its earnings outlook. It expects EPS to be $13-$14, even after absorbing $1 per share of refinancing costs in the second quarter.

Encore Capital maintained its portfolio purchasing outlook of $1.4-$1.5 billion.

Our View on ECPG

Scale-backed U.S. leadership, consistent execution, margin discipline and strong liquidity underpin Encore Capital’s durable growth. However, the company’s U.S.-heavy concentration might create a near-term headwind. Also, rising legal collection costs and high leverage may pressure margins if collections slow or borrowing costs increase.

Currently, ECPG carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of ECPG’s Peers

Credit Acceptance Corporation’s CACC second-quarter 2026 adjusted earnings per share of $12.12 surpassed the Zacks Consensus Estimate of $11.46. The bottom line increased 20.6% year over year.

CACC’s results were aided by a marginal rise in revenues and lower provisions and operating expenses.

Enova International, Inc. ENVA reported second-quarter 2026 adjusted earnings per share of $4.31, which increased from $3.23 in the prior-year quarter. The metric surpassed the Zacks Consensus Estimate of $3.99.

ENVA’s results benefited from increased revenues and improving credit quality. However, higher expenses were a headwind.

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

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