📊 ECPG Key Takeaways
Is Encore Capital Group Inc. (ECPG) a Good Investment?
ECPG demonstrates strong operational profitability (38.7% operating margin, 18.1% net margin) with solid free cash flow generation (77.5M, 16.3% margin), but is dangerously overleveraged with a 3.9x debt-to-equity ratio and critically weak interest coverage of 1.6x, leaving minimal margin for error. The 1,901% revenue surge appears driven by portfolio acquisitions typical of debt collection businesses, yet this growth masks deteriorating asset efficiency (1.6% ROA) and creates vulnerability to economic cycles or interest rate shocks.
Encore Capital Group shows strong current profitability, with a 35.4% operating margin, 14.5% net margin, and 26.3% ROE, while still generating positive free cash flow. However, balance-sheet risk is elevated with debt at 4.13x equity and only moderate 5.3x interest coverage, and the extreme revenue jump alongside flat net income suggests growth quality and comparability need closer scrutiny.
Why Buy Encore Capital Group Inc. Stock? ECPG Key Strengths
- Strong operating margin of 38.7% demonstrates pricing power and operational efficiency
- Positive free cash flow of 77.5M provides some financial flexibility despite leverage
- Profitable with 18.1% net margin and $86.2M net income, suggesting core business viability
- Strong operating profitability with $626.65M operating income and a 35.4% operating margin
- Solid shareholder returns on current capital base, highlighted by 26.3% ROE
- Positive cash generation with $153.20M operating cash flow and $126.93M free cash flow
ECPG Stock Risks: Encore Capital Group Inc. Investment Risks
- Extreme leverage: 3.9x debt-to-equity ratio with $4.0B long-term debt against $1.0B equity creates severe default risk
- Interest coverage ratio of 1.6x indicates minimal cushion to cover debt service—vulnerable to rising rates or revenue contraction
- Exceptionally low asset efficiency (1.6% ROA) and 1,901% revenue growth with only 284% earnings growth suggests accounting adjustments or one-time items masking earnings quality
- High leverage, with $4.03B of long-term debt and debt/equity of 4.13x
- Earnings quality concerns because net income was flat while reported revenue surged 1901.2% YoY
- Cash flow conversion is only moderate relative to earnings, with free cash flow margin at 7.2%
Key Metrics to Watch
- Interest coverage ratio (must improve above 2.5x for stability)
- Operating cash flow sustainability and debt repayment capacity
- Debt-to-equity trajectory and refinancing risk as debt matures
- Debt reduction and interest coverage
- Operating cash flow and free cash flow conversion versus net income
Encore Capital Group Inc. (ECPG) Financial Metrics & Key Ratios
💡 AI Analyst Insight
The current ratio below 1.0x warrants monitoring of short-term liquidity.
ECPG Profit Margin, ROE & Profitability Analysis
ECPG vs Finance Sector: How Encore Capital Group Inc. Compares
How Encore Capital Group Inc. compares to Finance sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Encore Capital Group Inc. Stock Overvalued? ECPG Valuation Analysis 2026
Based on fundamental analysis, Encore Capital Group Inc. shows some fundamental concerns relative to the Finance sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Encore Capital Group Inc. Balance Sheet: ECPG Debt, Cash & Liquidity
ECPG Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Encore Capital Group Inc.'s revenue has declined by 30% over the 5-year period, indicating business contraction. The most recent EPS of $-8.72 indicates the company is currently unprofitable.
ECPG Revenue Growth, EPS Growth & YoY Performance
ECPG Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2026 | $20.6M | $46.8M | $1.93 |
| Q3 2025 | $22.2M | $30.6M | $1.26 |
| Q2 2025 | $21.1M | $32.2M | $1.34 |
| Q1 2025 | $20.4M | $23.2M | $0.95 |
| Q3 2024 | $19.9M | $19.3M | $0.79 |
| Q2 2024 | $21.0M | $26.3M | $1.08 |
| Q1 2024 | $20.4M | $18.6M | $0.75 |
| Q3 2023 | $19.9M | $19.3M | $0.79 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Encore Capital Group Inc. Dividends, Buybacks & Capital Allocation
ECPG SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Encore Capital Group Inc. (CIK: 0001084961)
📋 Recent SEC Filings
❓ Frequently Asked Questions about ECPG
What is the AI rating for ECPG?
Encore Capital Group Inc. (ECPG) has a Combined AI Rating of SELL from Claude (SELL) and ChatGPT (HOLD) with 76% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are ECPG's key strengths?
Claude: Strong operating margin of 38.7% demonstrates pricing power and operational efficiency. Positive free cash flow of 77.5M provides some financial flexibility despite leverage. ChatGPT: Strong operating profitability with $626.65M operating income and a 35.4% operating margin. Solid shareholder returns on current capital base, highlighted by 26.3% ROE.
What are the risks of investing in ECPG?
Claude: Extreme leverage: 3.9x debt-to-equity ratio with $4.0B long-term debt against $1.0B equity creates severe default risk. Interest coverage ratio of 1.6x indicates minimal cushion to cover debt service—vulnerable to rising rates or revenue contraction. ChatGPT: High leverage, with $4.03B of long-term debt and debt/equity of 4.13x. Earnings quality concerns because net income was flat while reported revenue surged 1901.2% YoY.
What is ECPG's revenue and growth?
Encore Capital Group Inc. reported revenue of $475.4M.
Does ECPG pay dividends?
Encore Capital Group Inc. does not currently pay dividends.
Where can I find ECPG SEC filings?
Official SEC filings for Encore Capital Group Inc. (CIK: 0001084961) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is ECPG's EPS?
Encore Capital Group Inc. has a diluted EPS of $3.86.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined rating reflects both perspectives for balanced insights.
Is ECPG a good stock to buy right now?
Based on our AI fundamental analysis in May 2026, Encore Capital Group Inc. has a SELL rating with 76% confidence. Review the strengths and risks sections above before making a decision. This is not investment advice.
Is ECPG stock overvalued or undervalued?
Valuation metrics for ECPG: ROE of 8.3% (sector avg: 12%), net margin of 18.1% (sector avg: 25%). Compare these metrics with sector averages to assess valuation.
Should I buy ECPG stock in 2026?
Our dual AI analysis gives Encore Capital Group Inc. a combined SELL rating for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is ECPG's free cash flow?
Encore Capital Group Inc.'s operating cash flow is $82.3M, with capital expenditures of $4.9M. FCF margin is 16.3%.
How does ECPG compare to other Finance stocks?
Vs Finance sector averages: Net margin 18.1% (avg: 25%), ROE 8.3% (avg: 12%), current ratio N/A (avg: 1.2).
Is Encore Capital Group Inc. carrying too much debt?
ECPG has a debt-to-equity ratio of 3.90x, which is above the Finance sector average of 2x. Combined with a current ratio below 1, this warrants careful monitoring of the balance sheet.