Contrasting Encore Capital Group (ECPG) & ORIX (IX)

Encore Capital Group (NASDAQ: ECPG) and ORIX (NYSE:IX) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Analyst Ratings

This is a summary of current ratings for Encore Capital Group and ORIX, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encore Capital Group 0 4 1 0 2.20
ORIX 0 0 0 1 4.00

Encore Capital Group currently has a consensus price target of $35.90, indicating a potential downside of 10.47%. Given Encore Capital Group’s higher probable upside, equities research analysts plainly believe Encore Capital Group is more favorable than ORIX.

Risk & Volatility

Encore Capital Group has a beta of 1.76, suggesting that its stock price is 76% more volatile than the S&P 500. Comparatively, ORIX has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500.

Dividends

ORIX pays an annual dividend of $2.10 per share and has a dividend yield of 2.6%. Encore Capital Group does not pay a dividend. ORIX pays out 218.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional & Insider Ownership

2.0% of ORIX shares are owned by institutional investors. 8.8% of Encore Capital Group shares are owned by company insiders. Comparatively, 0.1% of ORIX 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Encore Capital Group 6.28% 12.38% 1.86%
ORIX 7.58% 9.10% 2.05%

Valuation and Earnings

This table compares Encore Capital Group and ORIX’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Encore Capital Group $1.01 billion 1.02 $256.64 million $2.44 16.43
ORIX $26.10 billion 0.83 $6.19 billion $0.96 84.93

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

Summary

ORIX beats Encore Capital Group on 9 of the 17 factors compared between the two stocks.

Encore Capital Group Company Profile

Encore Capital Group, Inc., through its subsidiaries, is a specialty finance company providing debt recovery solutions for consumers and property owners across a range of financial assets. The Company operates through Portfolio Purchasing and Recovery segment. The Company’s geographical segments include the United States, Europe and other. The Company’s portfolios of defaulted consumer receivables at discounts and manages them by partnering with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies, commercial retailers, and telecommunication companies. Defaulted receivables also include receivables subject to bankruptcy proceedings. The Company through certain subsidiaries, is engaged in portfolio purchasing and recovery in the United States, including Puerto Rico.

ORIX Company Profile

ORIX Corporation (ORIX) is a financial services company. The Company operates through six segments: Corporate Financial Services, which consists of lending, leasing and fee business; Maintenance Leasing, which consists of automobile leasing and rentals, car sharing, and test and measurement instruments and information technology-related equipment rentals and leasing; Real Estate, which consists of real estate development and rental, facility operation, real estate investment trust (REIT) asset management, and real estate investment advisory services; Investment and Operation, which consists of environment and energy-related business, principal investment and loan servicing (asset recovery); Retail Segment, which consists of life insurance, banking and card loan business, and Overseas Business, which consists of leasing, lending, investment in bonds, investment banking, asset management and ship- and aircraft-related operations.

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