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Reasons Why Investors Should Retain Bread Financial (BFH)
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Bread Financial Holdings, Inc. (BFH - Free Report) has been gaining momentum on the back of solid consumer spending, solid credit sales performance, strategic investments and a robust capital position.
Earnings Surprise History
Bread Financial has a decent earnings surprise history. It beat estimates in two of the last four quarters and missed in the other two, the average being 15.53%.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
The Zacks Consensus Estimate for BFH’s 2023 earnings per share is pegged at $10.99, indicating a year-over-year increase of 131.3%.
The credit sales performance is expected to improve on the back of solid consumer spending. With continued growth of credit sales, average loans are likely to increase. BFH expects strong credit sales in the fourth quarter of 2022, driven by new partner additions and holiday spending.
For 2022, Bread Financial expects further interest rate increases by Fed to result in a nominal benefit to total net interest income. Bread Financial estimates average receivables growth in the low double-digit range from the 2021 level.
Credit metrics should continue to remain strong with delinquency and net loss rates remaining below the historical averages. Given disciplined, proactive risk management and strong consumer payment behavior, net loss rates are expected to remain low.
Bread Financial expects credit metrics to normalize in 2022 from historically low rates yet remain below its historical through-the-cycle average of approximately 6%. It continues to project the loss rate to be in the high end of the low-to-mid 5% range.
Bread Financial should continue to invest in its digital platform, product innovation, marketing efforts and technology modernization. BFH intends to make incremental strategic investments of over $125 million in technology modernization, digital advancement, marketing and product innovation to fuel growth opportunities and future operating efficiencies.
Capital ratios are likely to improve on the back of rise in retained earnings, thus providing flexibility to continue to support profitable growth.
Bread Financial boasts a strong balance sheet by virtue of its solid cash position and has sufficient cash reserves to meet debt obligations.
Bread Financial remains focused on returning value to its shareholders. On Feb 28, 2022, the board approved a repurchase program to acquire up to 0.2 million shares in the open market during the one-year period ending on Feb 28, 2023. As of Sep 30, 2022, BFH had repurchased all 0.2 million shares available under this program for $12 million.
Price Performance
In the past year, the stock has declined 40.9% compared with the industry’s decline of 9.9%.
International Money’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 19.59%. In the past year, International Money has increased 38.7%.
The Zacks Consensus Estimate for IMXI’s 2022 and 2023 EPS indicates a year-over-year increase of 19.7% and 20.4%, respectively.
OppFi’s earnings surpassed estimates in two of the last four quarters and matched in the other two, the average earnings surprise being 93.06%. In the past year, OppFi has lost 47.5%.
The Zacks Consensus Estimate for OPFI’s 2023 EPS indicates a year-over-year increase of 675%.
The Zacks Consensus Estimate for Paysign’s 2022 and 2023 earnings has moved 33.3% and 6.2% north, respectively, in the past 30 days. In the past year, Paysign has increased 69.8%.
The Zacks Consensus Estimate for PAYS’s 2022 and 2023 EPS indicates a year-over-year increase of 340% and 41.6%, respectively.
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Reasons Why Investors Should Retain Bread Financial (BFH)
Bread Financial Holdings, Inc. (BFH - Free Report) has been gaining momentum on the back of solid consumer spending, solid credit sales performance, strategic investments and a robust capital position.
Earnings Surprise History
Bread Financial has a decent earnings surprise history. It beat estimates in two of the last four quarters and missed in the other two, the average being 15.53%.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
The Zacks Consensus Estimate for BFH’s 2023 earnings per share is pegged at $10.99, indicating a year-over-year increase of 131.3%.
The credit sales performance is expected to improve on the back of solid consumer spending. With continued growth of credit sales, average loans are likely to increase. BFH expects strong credit sales in the fourth quarter of 2022, driven by new partner additions and holiday spending.
For 2022, Bread Financial expects further interest rate increases by Fed to result in a nominal benefit to total net interest income. Bread Financial estimates average receivables growth in the low double-digit range from the 2021 level.
Credit metrics should continue to remain strong with delinquency and net loss rates remaining below the historical averages. Given disciplined, proactive risk management and strong consumer payment behavior, net loss rates are expected to remain low.
Bread Financial expects credit metrics to normalize in 2022 from historically low rates yet remain below its historical through-the-cycle average of approximately 6%. It continues to project the loss rate to be in the high end of the low-to-mid 5% range.
Bread Financial should continue to invest in its digital platform, product innovation, marketing efforts and technology modernization. BFH intends to make incremental strategic investments of over $125 million in technology modernization, digital advancement, marketing and product innovation to fuel growth opportunities and future operating efficiencies.
Capital ratios are likely to improve on the back of rise in retained earnings, thus providing flexibility to continue to support profitable growth.
Bread Financial boasts a strong balance sheet by virtue of its solid cash position and has sufficient cash reserves to meet debt obligations.
Bread Financial remains focused on returning value to its shareholders. On Feb 28, 2022, the board approved a repurchase program to acquire up to 0.2 million shares in the open market during the one-year period ending on Feb 28, 2023. As of Sep 30, 2022, BFH had repurchased all 0.2 million shares available under this program for $12 million.
Price Performance
In the past year, the stock has declined 40.9% compared with the industry’s decline of 9.9%.
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Stocks to Consider
Some better-ranked financial transaction service providers are International Money Express, Inc. (IMXI - Free Report) , OppFi Inc. (OPFI - Free Report) and Paysign, Inc. (PAYS - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
International Money’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 19.59%. In the past year, International Money has increased 38.7%.
The Zacks Consensus Estimate for IMXI’s 2022 and 2023 EPS indicates a year-over-year increase of 19.7% and 20.4%, respectively.
OppFi’s earnings surpassed estimates in two of the last four quarters and matched in the other two, the average earnings surprise being 93.06%. In the past year, OppFi has lost 47.5%.
The Zacks Consensus Estimate for OPFI’s 2023 EPS indicates a year-over-year increase of 675%.
The Zacks Consensus Estimate for Paysign’s 2022 and 2023 earnings has moved 33.3% and 6.2% north, respectively, in the past 30 days. In the past year, Paysign has increased 69.8%.
The Zacks Consensus Estimate for PAYS’s 2022 and 2023 EPS indicates a year-over-year increase of 340% and 41.6%, respectively.