What Happened?
Shares of debt recovery company Encore Capital Group (NASDAQ:ECPG) jumped 13.1% in the morning session after the company reported third-quarter 2025 results that significantly surpassed Wall Street's expectations.
The company posted revenue of $460.4 million, a 25.4% increase year on year, which beat analyst forecasts by nearly 12%. Its earnings per share (EPS) of $3.17 was a massive 60.1% above consensus estimates of $1.98. The strong results were driven by higher-than-expected collections, which also led to a significant improvement in profitability. Encore's pre-tax profit margin for the quarter was 21.7%, a notable increase of 10.6 percentage points compared to the same period last year, signaling greater operational efficiency.
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What Is The Market Telling Us
Encore Capital Group’s shares are quite volatile and have had 17 moves greater than 5% over the last year. But moves this big are rare even for Encore Capital Group and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 21 days ago when the stock dropped 6.2% after negative sentiment spread across the financial sector as Zions Bancorp disclosed a significant loan loss.
Zions Bancorp's stock dropped sharply after it revealed a $50 million loss on two commercial loans, prompting it to set aside a $60 million provision for credit losses. The news sparked a wider sell-off that weighed on the SPDR S&P Regional Banking ETF, which experienced its largest decline in months. Adding to the concern, Western Alliance Bancorp revealed it was dealing with a borrower who had failed to provide proper collateral. These events increased investor concerns regarding the health of credit markets, impacting stocks across the financial industry.
Encore Capital Group is up 3.1% since the beginning of the year, and at $48.46 per share, it is trading close to its 52-week high of $51.25 from February 2025. Investors who bought $1,000 worth of Encore Capital Group’s shares 5 years ago would now be looking at an investment worth $1,546.
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