Why Encore Capital's Shares Plunged


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of debt management company Encore Capital Group (NAS: ECPG) fell as much as 11% today.

So what: Revenue jumped 25%, to $144.8 million, and net income jumped 39%, to $21.3 million. Earnings per share from continuing operations of $0.82 beat estimates by $0.02.

Now what: If earnings beat expectations, what is going on with the stock? The trading pattern has been strange this morning, and it looks like no one wants to be the support at the bottom. Shares opened higher, but collapsed in light trading early this morning. The good news is that volume picked up and, halfway through the trading day, 4x the normal amount of shares has traded hands and the stock is moving higher.

I don't see any huge red flags in the results, and I would view today's trading as a bit of an anomaly in a lightly-traded stock. Long-term, this report was good for the company, and I certainly wouldn't be a panic seller today.

Interested in more info on Encore Capital Group? Add it to your watchlist by clicking here.

The article Why Encore Capital's Shares Plunged originally appeared on Fool.com.

Fool contributor Travis Hoium has no positions in the stocks mentioned above. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings, or follow his CAPS picks at TMFFlushDraw. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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