Encore Capital Group's 2026 EPS guidance of $12 reflects strong operational growth and suggests sustained or increased share repurchases supported by improving leverage and cash flow. The company emphasizes disciplined capital allocation amid favorable market conditions.
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Can you quantify expected share repurchases for 2026 under the $12 EPS guidance?
Analysis of Expected Share Repurchases for 2026 under the $12 EPS Guidance
Encore Capital Group (ECPG) has provided an EPS guidance of $12 for 2026, implying about 10% growth from 2025’s $10.91 EPS. This guidance reflects management’s confidence in the company’s earnings power, driven by strong portfolio purchasing, collections performance, operational innovation, and a stable consumer credit environment12.
2025 Share Repurchases: The company repurchased about 9% of its shares outstanding, amounting to roughly $90 million in 2025, reflecting a confident capital allocation toward buybacks after resuming the program early in the year32.
Leverage and Balance Sheet: Leverage ended 2025 at 2.4x (a 0.2x improvement year-over-year), below the midpoint of the target leverage range (2x-3x). Encore’s CFO emphasized maintaining a strong and flexible balance sheet to support growth opportunities and capital return programs32.
Capital Allocation Priorities: Portfolio purchasing remains the highest priority due to the attractive market environment and high returns, with share repurchases coming next in priority—M&A is currently a lower priority given the high bar for acquisitions34.
Cash Flow & Efficiency: Operating leverage and cash efficiency margins have improved, robust collections generate strong cash flows, and cash generation increased 22% year-over-year in 2025. The company expects cash efficiency margins to exceed 58% in 202656.
Management explicitly did not provide a specific forecast for share repurchases in 2026, stating, “we are not providing an estimate on repurchases amount for the coming year”1.
However, they highlighted a framework guiding repurchases initiated about 15 months ago, which states that share repurchases would resume at the midpoint of their leverage target and potentially accelerate as leverage approaches the lower end of the range78.
Given that leverage is trending down and below the midpoint, and Encore accelerated repurchase activity in late 2025, it would be reasonable to anticipate a potential increase or at least sustained level of buybacks in 2026 compared to 2025, reflecting improved leverage and cash flow78.
The decision to repurchase shares in 2026 will also factor in other capital needs, such as portfolio purchases and potential M&A, along with liquidity and market conditions78.
With 2025 buybacks at ~$90 million representing 9% of shares outstanding and given that portfolio purchases are expected to grow modestly (from $1.4 billion in 2025 to $1.4-$1.5 billion in 2026), cash flow generation is expected to remain strong or improve in 2026, which supports at least a similar or somewhat larger buyback capacity396.
EPS growth guidance to $12 (+10%) partly reflects improved earnings power but excludes explicit attribution of growth to buybacks. Management pointed to prior year buyback impacts as a reasonable proxy for modeling, suggesting the buyback impact on EPS growth is roughly consistent with recent patterns1.
Since shares repurchased in 2025 represent about 9% of shares, if similar or slightly higher repurchases occur in 2026, that could reduce share count approximately by another 5-10%, contributing to EPS growth.
Encore Capital Group’s 2026 $12 EPS guidance assumes continued strong operational performance, collection growth, and disciplined portfolio purchases.
While no explicit 2026 buyback dollar amount or repurchase pace was provided, the company’s leverage at 2.4x (below midpoint) and improved cash flow generation strongly suggest that share repurchases in 2026 are likely to be sustained at or somewhat higher than the approximately $90 million repurchased in 2025 (about 9% of shares outstanding).
The company’s stated capital allocation framework implies potential acceleration in buybacks as leverage declines further, so investors might reasonably expect buybacks to contribute materially—and possibly increasing—to the EPS growth underpinning the $12 target, though precise quantification is not provided.
Other factors such as portfolio purchasing and potential M&A activity, as well as liquidity and market environment, may influence the buyback level, as management intends to remain flexible and opportunistic.
In essence:
Expected share repurchases for 2026 under the $12 EPS guidance can be reasonably estimated to match or exceed the $90 million repurchased in 2025, reflecting roughly a 9% reduction in shares outstanding or more, enabled by continued cash flow strength and improving leverage. However, no explicit quantitative guidance on buyback amounts was given, and actual repurchase activity will be contingent on market conditions and other capital priorities as per management’s stated framework.17382
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