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Bread Financial Holdings’ (BFH - Free Report) operating earnings of 25 cents per share for the second quarter of 2022 missed the Zacks Consensus Estimate by 88.9%. The bottom line plunged about 96% year over year.
Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Revenues decreased 11.9% year over year to $893 million, resulting from higher average loan balances and improved loan yields, partially offset by a $21 million write-down in the carrying value of our equity method investment in Loyalty Ventures Inc. The top line missed the consensus estimate by 0.9%.
Credit sales increased 10% to $8.1 billion as consumer spending continued to recover. Average receivables of $17 billion were up 11% year over year.
Total interest income increased 17% to $1.1 billion. The net interest margin expanded 130 basis points to 18.6%.
Total non-interest expenses increased 12%, primarily attributable to an increase in compensation, marketing expenses and investments in the Bread Pay platform as part of the technology modernization initiative.
The delinquency rate of 4.4% deteriorated 110 basis points year over year, while the net loss rate of 5.6% deteriorated 50 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 24% year over year to $420 million, reflecting profitable loan growth and improved funding cost.
Financial Update
As of Jun 30, 2022, cash and cash equivalents was $3.1 billion, up 2.1% from the 2021 level.
At quarter-end, the debt level was down 1.2% from 2021-end to about $2 billion.
Tangible book value of $31.75 per share as of Jun 30, 2022 improved 17.1% over 2021 end.
Cash from operations increased 1.4% year over year to $743 million in the first half of 2022. Capital expenditure at Bread Financial increased 22.9% year over year to $43 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Sep 16 to stockholders of record as of Aug 12.
2022 Guidance
Management estimates average receivables growth in the low double-digit range from the 2021 level.
Total revenue growth is expected to be closely aligned with average loan growth.
Total non-interest expenses are expected to reflect positive operating leverage.
Total expenses will increase in 2022, given the ongoing investment in technology modernization, digital advancement, marketing, and product innovation, along with strong portfolio growth.
The net loss rate is guided in the low-to-mid 5% range.
Mastercard Incorporated (MA - Free Report) reported second-quarter 2022 earnings of $2.56 per share, which beat the Zacks Consensus Estimate by 8.5% and climbed 31% year over year. Net revenues improved 21% year over year to $5.5 billion and outpaced the consensus mark by 4.3%.
GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) rose 14% year over year on a local-currency basis to $2.1 trillion during the second quarter. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) soared 58% year over year on a local-currency basis.
Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, advanced 12% year over year to 30.4 billion.
Visa Inc.’s (V - Free Report) third-quarter fiscal 2022 earnings of $1.98 per share beat the Zacks Consensus Estimate by 13.8% and improved 33% year over year. Net revenues of $7.3 billion climbed 19% year over year and outpaced the consensus mark by 3.1%.
Payments volume of Visa on a constant-dollar basis climbed 12% year over year. On a constant-dollar basis, the total cross-border volume of Visa improved 40% year over year.
Upcoming Release
Global Payments (GPN - Free Report) is set to report second-quarter 2022 results on Aug 1. The Zacks Consensus Estimate for the second quarter is pegged at $2.36, indicating an increase of 15.7% from the year-ago reported figure.
Global Payments delivered an earnings surprise in the last four quarters.
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Bread Financial (BFH) Q2 Earnings Miss, Credit Sales Rise Y/Y
Bread Financial Holdings’ (BFH - Free Report) operating earnings of 25 cents per share for the second quarter of 2022 missed the Zacks Consensus Estimate by 88.9%. The bottom line plunged about 96% year over year.
Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Bread Financial Holdings, Inc. price-consensus-eps-surprise-chart | Bread Financial Holdings, Inc. Quote
Behind the Headlines
Revenues decreased 11.9% year over year to $893 million, resulting from higher average loan balances and improved loan yields, partially offset by a $21 million write-down in the carrying value of our equity method investment in Loyalty Ventures Inc. The top line missed the consensus estimate by 0.9%.
Credit sales increased 10% to $8.1 billion as consumer spending continued to recover. Average receivables of $17 billion were up 11% year over year.
Total interest income increased 17% to $1.1 billion. The net interest margin expanded 130 basis points to 18.6%.
Total non-interest expenses increased 12%, primarily attributable to an increase in compensation, marketing expenses and investments in the Bread Pay platform as part of the technology modernization initiative.
The delinquency rate of 4.4% deteriorated 110 basis points year over year, while the net loss rate of 5.6% deteriorated 50 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 24% year over year to $420 million, reflecting profitable loan growth and improved funding cost.
Financial Update
As of Jun 30, 2022, cash and cash equivalents was $3.1 billion, up 2.1% from the 2021 level.
At quarter-end, the debt level was down 1.2% from 2021-end to about $2 billion.
Tangible book value of $31.75 per share as of Jun 30, 2022 improved 17.1% over 2021 end.
Cash from operations increased 1.4% year over year to $743 million in the first half of 2022. Capital expenditure at Bread Financial increased 22.9% year over year to $43 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Sep 16 to stockholders of record as of Aug 12.
2022 Guidance
Management estimates average receivables growth in the low double-digit range from the 2021 level.
Total revenue growth is expected to be closely aligned with average loan growth.
Total non-interest expenses are expected to reflect positive operating leverage.
Total expenses will increase in 2022, given the ongoing investment in technology modernization, digital advancement, marketing, and product innovation, along with strong portfolio growth.
The net loss rate is guided in the low-to-mid 5% range.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players From the Industry
Mastercard Incorporated (MA - Free Report) reported second-quarter 2022 earnings of $2.56 per share, which beat the Zacks Consensus Estimate by 8.5% and climbed 31% year over year. Net revenues improved 21% year over year to $5.5 billion and outpaced the consensus mark by 4.3%.
GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) rose 14% year over year on a local-currency basis to $2.1 trillion during the second quarter. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) soared 58% year over year on a local-currency basis.
Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, advanced 12% year over year to 30.4 billion.
Visa Inc.’s (V - Free Report) third-quarter fiscal 2022 earnings of $1.98 per share beat the Zacks Consensus Estimate by 13.8% and improved 33% year over year. Net revenues of $7.3 billion climbed 19% year over year and outpaced the consensus mark by 3.1%.
Payments volume of Visa on a constant-dollar basis climbed 12% year over year. On a constant-dollar basis, the total cross-border volume of Visa improved 40% year over year.
Upcoming Release
Global Payments (GPN - Free Report) is set to report second-quarter 2022 results on Aug 1. The Zacks Consensus Estimate for the second quarter is pegged at $2.36, indicating an increase of 15.7% from the year-ago reported figure.
Global Payments delivered an earnings surprise in the last four quarters.