Encore Capital Doubles as Debt Supply Fuels Record Growth

Encore Capital Group shares gained about 120% in the year through September 22, as rising consumer defaults helped the debt buyer expand. In the second quarter, the company made a record $372 million in U.S. portfolio purchases.

Encore buys overdue consumer debts from banks and other lenders, then tries to collect more than it paid. When more borrowers fall behind, lenders may sell more accounts, giving Encore a larger pool of potential purchases.

The business is also collecting more from the debt it already owns. Global collections rose 13% from a year earlier to a second-quarter record of $737 million, while net income increased 9% to $64 million, according to the company.

The credit backdrop may be starting to cool. Federal Reserve data show the annualized charge-off rate on credit-card loans at commercial banks fell to 3.82% in the second quarter of 2026, from 4.19% a year earlier. Lower charge-offs can mean less distressed debt for buyers to purchase.

Encore has other supports. It refinanced $1 billion of debt in May, and said the move should cut annual interest costs by about $15 million. The refinancing cost $30.5 million in the second quarter, however, weighing on reported earnings.

After a strong first half, Encore raised its 2026 forecast. It now expects $2.80 billion to $2.85 billion in collections and earnings of $13 to $14 per share, while keeping its portfolio-purchase outlook at $1.4 billion to $1.5 billion.

The key question is whether Encore can keep buying debt at attractive prices as defaults ease. Its latest results show strong execution, but the supply boost tied to financial stress is cyclical, not permanent.