Is PROG Holdings Headed for a Breakdown?
A level of support has formed in the chart of PROG Holdings Inc. (PRG). The stock has tested that level several times over the past couple of months a...
A level of support has formed in the chart of PROG Holdings Inc. (PRG). The stock has tested that level several times over the past couple of months and is heading back down to it. If it falls through the support level, a breakdown is expected. Read more to learn how to take advantage of this trade.
PROG Holdings Inc. (PRG) is a provider of lease-purchase solutions through more than 30,000 retail partner locations in 46 states and the District of Columbia, including e-commerce merchants. The firm operates in two segments Progressive Leasing and Vive Financial.
The company had a fairly strong second quarter where gross merchandise value for their Progressive Leasing segment grew 25.2% year over year, driven by the continued scaling of large national accounts and increased penetration in e-commerce.
PRG also recently acquired Four Technologies, a Miami-based buy now pay later company that allows consumers to pay for merchandise through 4 interest-free installments.
The company had $138 million in cash as of the end of the second quarter compared to no short-term debt. Management is highly efficient with a return on equity of 28.1%. This has led to a Quality Grade of B in our POWR Ratings system. However, analysts expect earnings to fall 50% year over year in the current quarter.
The stock looks undervalued with a trailing P/E of 11.54 and a forward P/E of 12.76. The stock has been showing bearish momentum since late August as shown in the chart below.
Take a look at the 1-year chart of PRG below with added notations:
Chart of PRG provided by TradingView
PRG has tested the $42 level (green) as support several times over the past few months. The stock has fallen back down to that support again.
A break of $42 most likely means lower prices for the stock. A trader could enter a short position if the stock were to break below the support, with a protective stop placed above the entry point.
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PRG shares were trading at $42.19 per share on Friday morning, down $0.19 (-0.45%). Year-to-date, PRG has declined -21.68%, versus a 19.21% rise in the benchmark S&P 500 index during the same period.
About the Author: Christian Tharp
I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group and Yolo Publishing.