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Are Investors Undervaluing Encore Capital Group (ECPG) Right Now?

Zacks Equity Research
·2-min read

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Encore Capital Group (ECPG) is a stock many investors are watching right now. ECPG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 3.96 right now. For comparison, its industry sports an average P/E of 8.22. Over the past 52 weeks, ECPG's Forward P/E has been as high as 6.56 and as low as 2.47, with a median of 5.66.

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Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. ECPG has a P/S ratio of 0.76. This compares to its industry's average P/S of 0.83.

These are only a few of the key metrics included in Encore Capital Group's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, ECPG looks like an impressive value stock at the moment.


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Encore Capital Group Inc (ECPG) : Free Stock Analysis Report
 
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