Analyzing CPI Card Group (PMTS) & Encore Capital Group (ECPG)

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

Dividends

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CPI Card Group pays an annual dividend of $0.22 per share and has a dividend yield of 9.0%. Encore Capital Group does not pay a dividend. CPI Card Group pays out -71.0% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares CPI Card Group and Encore Capital Group’s 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) -7.90
Encore Capital Group $1.19 billion 0.97 $83.22 million $4.01 11.15

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.

Profitability

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%

Risk & Volatility

CPI Card Group has a beta of -0.56, indicating that its stock price is 156% less volatile than the S&P 500. Comparatively, Encore Capital Group has a beta of 1.62, indicating that its stock price is 62% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings 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 presently has a consensus price target of $5.75, indicating a potential upside of 134.69%. Encore Capital Group has a consensus price target of $51.63, indicating a potential upside of 15.49%. Given CPI Card Group’s higher probable upside, research analysts clearly believe CPI Card Group is more favorable than Encore Capital Group.

Insider & Institutional Ownership

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

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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