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What Awaits Bread Financial (BFH) This Earnings Season?

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Bread Financial Holdings, Inc. (BFH - Free Report) is scheduled to report second-quarter 2022 earnings on Jul 28, before the opening bell. The company delivered an earnings surprise in three of the last four quarters and missed in one, the average being 58.69%.

Factors to Note

Improved credit performance, reduction in interest expense, net due to lower average balances and higher revenues are likely to have driven performance in the to-be-reported quarter.

Higher average loan balances, improved loan yields, improvement in cost of funds and improved net interest margin are likely to have driven revenues in the to-be-reported quarter.

Credit performance is likely to have witnessed an uptick in the to-be-reported quarter, driven by prudent risk management strategy changes, improved underwriting actions, and direct consumer stimulus payments that result in greater customer liquidity and ability to pay as well as new brand partner signings and successful renewals.

Improved economic conditions, proactive risk management, slower-than-expected payment normalization and resilient consumer health are likely to have resulted in a lower loss rate in the to-be-reported quarter.

The Zacks Consensus Estimate for second-quarter revenues is pegged at $899.4 million, which indicates a decline of 11.2% from the prior-year quarter.

Total expenses are likely to have increased due to continued investment in technology modernization, digital advancement, marketing, product innovation, increased salaries, contract labor and higher volume-related staffing levels. Higher data processing expenses and legal and other business activity costs are likely to have resulted in higher expenses.

The Zacks Consensus Estimate for earnings per share is pegged at $2.27, indicating a decrease of 62.1% from the year-ago quarter’s reported figure.

What Our Quantitative Model Unveils

Our proven model does not conclusively predict an earnings beat for Bread Financial this time around. This is because the stock needs to have the right combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). This is not the case as you can see below.

Earnings ESP: Bread Financial has an Earnings ESP of -5.08%. This is because the Most Accurate Estimate is pegged at $2.16, lower than the Zacks Consensus Estimate of $2.27. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Bread Financial carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Some stocks worth considering from the financial transaction services sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

FirstCash Holdings, Inc. (FCFS - Free Report) has an Earnings ESP of +2.15 and a Zacks Rank #2. The Zacks Consensus Estimate for the second-quarter 2022 earnings indicates a year-over-year increase of 30.9%

FirstCash Holdings’s earnings surpassed estimates in each of the last four quarters, the average beat being 20.29%.

Nuvei Corporation (NVEI - Free Report) has an Earnings ESP of +0.73 and a Zacks Rank #3.

Nuvei’s earnings surpassed estimates in each of the last four quarters, the average beat being 8.94%.

WEX Inc. (WEX - Free Report) has an Earnings ESP of +2.29 and a Zacks Rank #2. The Zacks Consensus Estimate for the second-quarter 2022 earnings indicates a year-over-year increase of 48%.

WEX’s earnings surpassed estimates in each of the last four quarters, the average beat being 8.56%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.