Encore Capital Group Inc Common Stock (ECPG)

FairStock Score: 87/100 — HIGH CONVICTION

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

Encore is a specialty finance company that purchases defaulted consumer receivables and then works with borrowers to recover value. This is not a wonderful business in the Buffett sense: it needs constant capital, has limited pricing power, and depends on collections, regulation, and credit conditions. Still, scale and data can create a modest edge, and the reported turnaround is real. In FY2025, net income was $256.8M and diluted EPS $10.91, reversing FY2024's loss of $139.2M and FY2023's loss of $206.5M. In fiscal Q2 2026, the quarter ended 2026-06-30, net income was $64.0M and diluted EPS $2.81. FairStock's numbers show a 30.54% ROE, but ROCE is only 8.34%, so much of that shareholder return is leverage-driven. Debt/equity is 3.88, Altman Z is 0.67, and Piotroski is 3/9—clear yellow flags. Valuation, by contrast, looks undemanding: at the 2026-10-13 close of $105.60, P/E is 8.02 and P/B is 2.08. The Graham Number is $122.72, leaving a 13.95% margin of safety, and trailing free cash flow is $125.1M for a 5.6% FCF yield. A PEG of 0.10 and EV/EBITDA of 8.84 add to the cheapness case. The Lynch category is TURNAROUND, because it returned to profit after losses within three years. My conclusion: a statistically cheap, high-ROE but highly levered and fragile credit story. The price may be fair-to-cheap if profits persist, but the balance sheet and weak quality scores mean it deserves a margin of safety and careful monitoring.

In plain English: Encore Capital buys unpaid consumer debts at a discount and works with people to collect what they owe. The business has moved from losses to profits, and it earns a high return on shareholder money, but it uses a lot of borrowed money and has some weak financial-strength signals. At the recent price, the stock looks somewhat cheap against its earnings and accounting value, though the risks are meaningful.

The full AI analysis, bull and bear case and key monitorables are in FairStock Pro.

Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer