As industry peer International Money Express, or Intermex, hits new highs, Encore Capital takes aim at new buy point. ECPG stock joins financial powerhouse Visa on the IBD Breakout Stocks Index.
With a 98 Composite Rating, Encore Capital ranks No. 1 in the specialty financial services industry group. Intermex ranks a close second with a 97 rating in Stock Checkup.
Showing signs of demand, Encore Capital sports a B+ Accumulation/Distribution Rating and a 1.8 up/down volume ratio. Plus, the stock has posted three quarters of rising fund ownership, and 64 funds with an A+ or A rating from IBD own shares.
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Encore Capital Faces Earnings Test After 115% Growth
Headquartered in San Diego, Encore Capital is an international provider of debt recovery solutions and related services. Through its subsidiaries around the globe, Encore purchases or services portfolios of receivables from major banks, credit unions and utility providers.
The debt recovery solutions specialist has three primary business units: Midland Credit Management in the U.S., Cabot Credit Management in Europe, and LAAP, which serves the Latin America and Asia-Pacific markets. Together, the Encore Capital Group has roughly 6,600 employees with operations in nine countries.
On May 4, Encore reported 115% earnings growth, marking a third straight quarter of acceleration. Sales growth rose from a 7% slowdown in Q4 2021 to a 20% increase in the first quarter of the year.
Encore Capital is set to report Q2 earnings on Aug. 3. Analysts expect earnings to slow by 34% for the quarter, but they're forecasting 14% growth for the year.
IBD 50 stock Intermex, featured on June 28, is on tap to report Q2 earnings the same day. Wall Street consensus estimates call for 13% EPS growth in Q2 and a 12% gain for the year.
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Encore Capital Shows Strength Ahead Of Q2 Earnings
While it's risky to buy any stock just before it reports, Encore Capital continues to climb, with its relative strength line already hitting a new high.
The stock's 50-day moving average is close to retaking its longer-term 200-day line. In a sign of rebounding strength, Encore's 21-day moving average has already moved well above its 50-day and 200-day benchmarks.
After jumping nearly 5% in volume 115% higher than normal Tuesday, Encore Capital closed the session just 2% below the 72.77 buy point in a cup pattern.
With earnings also due on Aug. 3, Intermex is slightly extended beyond an earlier breakout from a double bottom, a common chart pattern in volatile markets.
See how Encore Capital and Intermex report next week — and how Wall Street reacts.
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