CPI Card Group (PMTS) & Encore Capital Group (ECPG) Financial Review

CPI Card Group (NASDAQ: PMTS) and Encore Capital Group (NASDAQ:ECPG) are both small-cap business services companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Profitability

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This table compares CPI Card Group and Encore Capital Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CPI Card Group -8.64% N/A -1.39%
Encore Capital Group 7.01% 18.70% 2.59%

Institutional and Insider Ownership

11.6% of CPI Card Group shares are owned by institutional investors. 5.0% of CPI Card Group shares are owned by company insiders. Comparatively, 8.8% of Encore Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and price targets for CPI Card Group and Encore Capital Group, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CPI Card Group 1 4 0 0 1.80
Encore Capital Group 0 2 3 0 2.60

CPI Card Group currently has a consensus target price of $5.75, indicating a potential upside of 133.74%. Encore Capital Group has a consensus target price of $51.63, indicating a potential upside of 14.59%. Given CPI Card Group’s higher possible upside, research analysts clearly believe CPI Card Group is more favorable than Encore Capital Group.

Risk and Volatility

CPI Card Group has a beta of -0.58, indicating that its share price is 158% less volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.62, indicating that its share price is 62% more volatile than the S&P 500.

Earnings and Valuation

This table compares CPI Card Group and Encore Capital Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CPI Card Group $254.86 million 0.11 -$22.01 million ($0.31) -7.94
Encore Capital Group $1.19 billion 0.98 $83.22 million $4.01 11.23

Encore Capital Group has higher revenue and earnings than CPI Card Group. CPI Card Group is trading at a lower price-to-earnings ratio than Encore Capital Group, indicating that it is currently the more affordable of the two stocks.

Dividends

CPI Card Group pays an annual dividend of $0.22 per share and has a dividend yield of 8.9%. Encore Capital Group does not pay a dividend. CPI Card Group pays out -71.0% of its earnings in the form of a dividend.

Summary

Encore Capital Group beats CPI Card Group on 12 of the 16 factors compared between the two stocks.

About CPI Card Group

CPI Card Group Inc., formerly CPI Holdings I, Inc., provides Financial Payment Card solutions in North America. The Company is engaged in the design, production, data personalization, packaging and fulfillment of Financial Payment Cards, which it defines as credit cards, debit cards and prepaid debit cards issued on the networks of the Payment Card Brands in the United States, Europe and Canada. It is also engaged in the design, production, data personalization, packaging and fulfillment of retail gift and loyalty cards. Its segments include U.S. Debit and Credit, which produces Financial Payment Cards and provides integrated card services to card-issuing banks in the United States; U.S. Prepaid Debit, which provides integrated card services to Prepaid Debit Card issuers in the United States; U.K. Limited, which produces retail cards for customers in the United Kingdom and continental Europe, and Other, which has operations in Ontario, Canada and Petersfield, United Kingdom.

About Encore Capital Group

Encore Capital Group, Inc., a specialty finance company, together with its subsidiaries, provides debt recovery solutions and other related services for consumers across a range of financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the debt collection and management activities; and the management of non-performing loans. In addition, the company provides portfolio management services to banks for non-performing loans; and financial solutions to individuals who have previously defaulted on their obligations. Further, it focuses on consumer non-performing loans, including insolvencies, and bank and non-bank receivables. Encore Capital Group, Inc. was founded in 1998 and is headquartered in San Diego, California.

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