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

Risk & Volatility

Encore Capital Group has a beta of 1.8, meaning that its stock price is 80% more volatile than the S&P 500. Comparatively, Asta Funding has a beta of 0.11, meaning that its stock price is 89% less volatile than the S&P 500.

Earnings & Valuation

This table compares Encore Capital Group and Asta Funding’s top-line 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 0.67 $83.22 million $4.01 6.39
Asta Funding $21.43 million 1.30 -$13.00 million N/A N/A

Encore Capital Group has higher revenue and earnings than Asta Funding.

Profitability

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

Net Margins Return on Equity Return on Assets
Encore Capital Group 6.13% 19.38% 2.70%
Asta Funding -16.72% -1.01% -0.81%

Insider and Institutional Ownership

14.8% of Asta Funding shares are owned by institutional investors. 1.8% of Encore Capital Group shares are owned by insiders. Comparatively, 62.9% of Asta Funding shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for Encore Capital Group and Asta Funding, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Encore Capital Group 0 2 2 0 2.50
Asta Funding 0 0 0 0 N/A

Encore Capital Group currently has a consensus price target of $45.50, indicating a potential upside of 77.66%. Given Encore Capital Group’s higher possible upside, analysts clearly believe Encore Capital Group is more favorable than Asta Funding.

Summary

Encore Capital Group beats Asta Funding on 8 of the 11 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 Asta Funding

Asta Funding, Inc., together with its subsidiaries, engages in the consumer receivable business in the United States. The company operates through four segments: Consumer Receivables, Personal Injury Claims, Structured Settlements, and GAR Disability Advocacy. The Consumer Receivables segment involved in the purchase, management, and servicing distressed consumer receivables, including charged-off receivables consisting of accounts that have been written-off by the originators and might have been previously serviced by collection agencies; semi-performing receivables, including accounts where the debtor is currently making partial or irregular monthly payments, but the accounts might have been written-off by the originators; and performing receivables comprising accounts where the debtor is making regular monthly payments that might or might not have been delinquent in the past. Its distressed consumer receivables include MasterCard, Visa, and other credit card accounts, which were charged-off by the issuers or providers for non-payment. The Personal Injury Claims segment invests in funding personal injury claims. The Structured Settlements segment purchases periodic structured settlements and annuity policies from individuals in exchange for a lump sum payment. The GAR Disability Advocacy segment obtains and represents individuals in their claims for social security disability and supplemental security income benefits from the social security administration. Asta Funding, Inc. was founded in 1994 and is headquartered in Englewood Cliffs, New Jersey.

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