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

Earnings & Valuation

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This table compares Encore Capital Group and CPI Card Group’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Encore Capital Group $1.19 billion 0.98 $83.22 million $4.01 11.26
CPI Card Group $254.86 million 0.11 -$22.01 million ($0.31) -8.35

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 Encore Capital Group and CPI Card Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Encore Capital Group 7.01% 18.70% 2.59%
CPI Card Group -8.64% N/A -1.39%

Volatility and Risk

Encore Capital Group has a beta of 1.62, suggesting that its stock price is 62% more volatile than the S&P 500. Comparatively, CPI Card Group has a beta of -0.58, suggesting that its stock price is 158% less volatile than the S&P 500.

Dividends

CPI Card Group pays an annual dividend of $0.22 per share and has a dividend yield of 8.5%. Encore Capital Group does not pay a dividend. CPI Card Group pays out -71.0% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Encore Capital Group and CPI Card Group, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encore Capital Group 0 2 3 0 2.60
CPI Card Group 1 4 0 0 1.80

Encore Capital Group currently has a consensus price target of $51.63, suggesting a potential upside of 14.34%. CPI Card Group has a consensus price target of $5.75, suggesting a potential upside of 122.01%. Given CPI Card Group’s higher possible upside, analysts plainly believe CPI Card Group is more favorable than Encore Capital Group.

Insider & Institutional Ownership

11.6% of CPI Card Group shares are owned by institutional investors. 8.8% of Encore Capital Group shares are owned by insiders. Comparatively, 5.0% of CPI Card Group shares are owned by 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.

Summary

Encore Capital Group beats CPI Card Group on 11 of the 15 factors compared between the two stocks.

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.

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.

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