PRA Group isn’t a household name, but it is the global leader in what it does. The company acquires and collects nonperforming loans from banks and other financial institutions in the Americas, Europe and Australia. In essence, PRA does best when the economy is weak enough to churn out plenty of delinquencies, but not so bad that people can never possibly repay any of their debts.
Covid notwithstanding, the exceptionally strong economy of the past decade, supported by an unprecedented amount of monetary and fiscal stimulus, went in the way of PRA Group’s business model. Its revenue growth stagnated as a result and the stock suffered. It traded in the vicinity of $65 a share between 2013 and 2015, but is now down more than 60% to under $24. In this analysis we examine the Elliott Wave path the stock price drew over the course of that lost decade.
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The weekly chart reveals that the 2015 to 2023 bear market took the shape of a simple zigzag correction, marked (A)-(B)-(C). There is a five-wave impulse, marked 1-2-3-4-5 in waves (A) and (C), while wave (B) is an expanding triangle pattern, labeled A-B-C-D-E. The three-wave structure of each of the five sub-waves of that triangle is visible, as well.
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According to the Elliott Wave theory, triangles precede the final wave of the larger sequence. Here, the final wave is (C), which seems to have ended at $11.85 in late-2023. If this count is correct, the following bullish reversal stands for the resumption of the uptrend, which had been in progress prior to 2015. It looks like PRA Group is finally ready to leave its lost decade behind. Provided that any recession along the way doesn’t turn into an outright depression, the stock can plausibly triple to a new record high near $75 a share in the long term.
