Shareholders in Encore Capital Group, Inc. (NASDAQ:ECPG) had a terrible week, as shares crashed 24% to US$37.72 in the week since its latest annual results. Revenues fell 7.5% short of expectations, at US$1.3b. Earnings correspondingly dipped, with Encore Capital Group reporting a statutory loss of US$5.83 per share, whereas the analysts had previously modelled a profit in this period. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Encore Capital Group

Following the latest results, Encore Capital Group's five analysts are now forecasting revenues of US$1.57b in 2025. This would be a meaningful 19% improvement in revenue compared to the last 12 months. Encore Capital Group is also expected to turn profitable, with statutory earnings of US$6.29 per share. In the lead-up to this report, the analysts had been modelling revenues of US$1.61b and earnings per share (EPS) of US$7.57 in 2025. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.

It'll come as no surprise then, to learn that the analysts have cut their price target 7.0% to US$59.75. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Encore Capital Group at US$66.00 per share, while the most bearish prices it at US$55.00. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

Of course, another way to look at these forecasts is to place them into context against the industry itself. For example, we noticed that Encore Capital Group's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 19% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 4.3% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 11% annually. So it looks like Encore Capital Group is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Encore Capital Group's future valuation.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Encore Capital Group going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Encore Capital Group you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.