Portfolio Recovery Associates... and something...
This is my favorite stock of all time and I just realized i have no clue what the second A is for.
Anyways, I wanted to get this entry in before the bell so I can be laughed at come 4:00. PRAA, the debt collection agency that collect... debt... is announcing today, which of course invites crystal ball predictions of whether it will beat the street. My crystal balls say yes, and I doubled my stock position to put my money where my mouth is. And in the face of today's difficult debt-collection joblessness and pennilessness, one probably wonders if thats the crystal balls talking or just some balls of steel.
Well, yes, collections are tougher right now, but overhead is roughly the same as last quarter as they haven't been adding collectors (they beat by a nickel last quarter) yet they're collecting on a larger-than-ever pool of debt. Hopefully, the large number of people they can call and harass will make up for the lower percentage success rates. Meanwhile, EPS estimates for this quarter represent slightly negative earnings growth from 4Q07 to 4Q08; yet last quarter we saw EPS growth of about 5% yoy, and faced a similarly difficult environment.
PRAA is currently trading at 7x forward earnings and I wouldn't really care less if it misses by a dime this quarter; they have enough ammo to do some real damage in coming years. Plus, I think missing earnings has already been priced in... at least somewhat. In the past month, PRAA has fallen over 30% while S&P has dropped only 6% and nasdaq has been almost breakeven. So I don't see that much downside to shoring up my position prior to earnings.
So I'm not worried. Nope. Not one bit. Crap it's 3:52 now. OH DEAR GOD PLEASE PRAA ANNOUNCE SOMETHING GOOD!!!!