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Investing.com - BTIG maintained its Neutral rating on PROG Holdings (NYSE:PRG) following the company’s acquisition of Purchasing Power. The company currently trades at a P/E ratio of 7.51, significantly below market averages, according to InvestingPro data.
The research firm noted that market skepticism about the acquisition appears warranted, with PRG stock down 1% at the time of their analysis. This comes amid a challenging year for PRG, which has seen its stock decline over 30% year-to-date despite appearing undervalued based on InvestingPro’s Fair Value assessment.
BTIG acknowledged some positive aspects of the deal, including the potential for double-digit EPS accretion and clear expense synergies between the two operationally similar businesses, with payroll deduction capabilities being the key differentiator.
On the cautious side, BTIG pointed out that PRG paid more than twice its own valuation multiple for Purchasing Power, despite the acquired business having similar growth rates and potential EBITDA margins as PRG’s existing leasing business.
The research firm expressed concern that the Purchasing Power acquisition might distract management from focusing on the Four Technologies business, which BTIG views as PRG’s primary opportunity for growth margin expansion and richer valuation. Despite these concerns, PRG maintains a "GREAT" overall financial health score and analysts maintain a consensus Buy recommendation, as revealed in InvestingPro’s comprehensive Research Report, one of 1,400+ available for top US equities.
In other recent news, PROG Holdings reported a strong third-quarter performance for 2025, exceeding earnings expectations with an EPS of $0.90, which was a 21.62% surprise over the forecasted $0.74. The company’s revenue for the quarter reached $595.1 million, slightly above projections, although it marked a decline from the previous year’s $606.1 million. In a strategic move, PROG Holdings announced its agreement to acquire Purchasing Power for $420 million in cash, funded through cash on hand and debt financing. This acquisition will also maintain Purchasing Power’s existing non-recourse funding debt of approximately $330 million.
Additionally, PROG Holdings declared a quarterly cash dividend of $0.13 per share, payable on December 2, 2025. Analyst firm BTIG upgraded the company’s stock from Sell to Neutral, citing the current valuation’s reflection of challenges in its Progressive Leasing business. Meanwhile, KeyBanc maintained an Overweight rating with a $45.00 price target, emphasizing the company’s potential for significant cash generation. These developments highlight PROG Holdings’ ongoing strategic maneuvers and financial performance.
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