Stock of the day 27/11/2014 – Arrow Global Group

Debt purchasing isn’t a glamourous business. But glamour doesn’t always make money, whereas, as Arrow Global Group has shown, debt purchasing can. Tomorrow sees the announcement of Arrow Global’s third quarter earnings for 201, following a flurry of bold moves by the debt purchaser.

Arrow Global is a relative babe on the markets, and has only been traded for around 13 months. Its IPO was in October 2013, where after being floated at 205p, the company opened its first day of trading at 225p, seeing the company valued at £349 million. Within a month of its debut shares had raised to 268.16p, reaching its all-time high in January 2014 at 277.75p.

Since then Arrow Global has slipped down the charts, culminating in a low of 210.6 in April 2014. It released its half year results in August, which saw earnings before tax growing 10.6% to £48 million, and a growth in assets under management from £8.5 billion to £10.6 billion within a year. The markets reacted positively to this information, with shares rising 1.71% on the day of the release to 253.25. This was then followed by a back-half peak of 270.05p at the end of September. This came after Arrow Global’s announcement of the £158 million purchase of Capquest, a rival firm. This led Arrow Global to grow its clients from 5 million to 9 million, causing 5% share price growth on the day of the announcement.

Whilst Arrow Global couldn’t maintain this acquisition-inspired peak, its announcement of a £220 million refinancing in October 2014 saw growth back to 254.05p by the end of the month after it had slipped to 231.75p in the FTSE-related slump of mid-October. At the beginning of November Arrow Global announced another acquisition, this time of ‘selected’ assets from a smaller debt-purchaser, Tessera. Arrow Global’s buying bug continued into this week, with Thursday seeing the company reveal it has received approval to purchase Quest Topco Limited, further improving the company’s standing in the sector.

This announcement caused share prices to rise to 243.5p today, following a fall to 232.25p at the start of last week. With its last release, Arrow Global targeted geographical and asset class diversification, alongside predicting continued growth consumer credit following the stagnation caused by the recession. The positivity has led Numis Securities Ltd to give Arrow Global a ‘buy’ rating before the Q3 announcement, as did analysts at Panmure Gordon and Shore Capital. The bullish sentiment stemming from analysts and Arrow Global’s continued confidence in purchasing assets suggests that Europe’s leading purchaser and manager of debt is in a good position in regards to its Q3 report tomorrow.