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Here's Why Hold Strategy is Apt for Bread Financial (BFH) Stock
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Bread Financial Holdings, Inc. (BFH - Free Report) is poised for growth 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 $11.15, indicating a year-over-year increase of 222.3%.
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. With new partner additions and holiday spending, BFH continues to expect strong credit sales.
Credit metrics should 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.
BFH 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. It uses share repurchases as a tool to mitigate the adverse impact of foreign exchange and intends to focus more on share buybacks and mergers and acquisitions.
The Zacks Consensus Estimate for 2023 earnings has moved 0.2% north in the past 30 days. This should instill investors' confidence in the BFH stock.
Price Performance
In the past year, the stock has declined 46.1% compared with the industry’s decline of 9.4%.
The Zacks Consensus Estimate for Cantaloupe’s 2024 earnings has moved 62.5% north in the past 30 days. In the past year, Cantaloupe has lost 45.1%.
The Zacks Consensus Estimate for CTLP’s 2023 and 2024 EPS indicates year-over-year increases of 66.7% and 1400%, respectively.
The Zacks Consensus Estimate for Evertec’s 2023 earnings has moved 1.2% north in the past 30 days. In the past year, Evertec has lost 30.2%.
The Zacks Consensus Estimate for EVTC’s 2023 EPS indicates a year-over-year increase of 6.8%.
Envestnet’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 5.04%. The Zacks Consensus Estimate for Envestnet’s 2023 earnings has moved 0.9% north in the past seven days.
The Zacks Consensus Estimate for ENV’s 2023 EPS indicates a year-over-year increase of 14%. In the past year, ENV has lost 18.1%.
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Here's Why Hold Strategy is Apt for Bread Financial (BFH) Stock
Bread Financial Holdings, Inc. (BFH - Free Report) is poised for growth 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 $11.15, indicating a year-over-year increase of 222.3%.
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. With new partner additions and holiday spending, BFH continues to expect strong credit sales.
Credit metrics should 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.
BFH 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. It uses share repurchases as a tool to mitigate the adverse impact of foreign exchange and intends to focus more on share buybacks and mergers and acquisitions.
The Zacks Consensus Estimate for 2023 earnings has moved 0.2% north in the past 30 days. This should instill investors' confidence in the BFH stock.
Price Performance
In the past year, the stock has declined 46.1% compared with the industry’s decline of 9.4%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked financial transaction service providers are Cantaloupe, Inc. (CTLP - Free Report) , Evertec, Inc. (EVTC - Free Report) and Envestnet, Inc (ENV - 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.
The Zacks Consensus Estimate for Cantaloupe’s 2024 earnings has moved 62.5% north in the past 30 days. In the past year, Cantaloupe has lost 45.1%.
The Zacks Consensus Estimate for CTLP’s 2023 and 2024 EPS indicates year-over-year increases of 66.7% and 1400%, respectively.
The Zacks Consensus Estimate for Evertec’s 2023 earnings has moved 1.2% north in the past 30 days. In the past year, Evertec has lost 30.2%.
The Zacks Consensus Estimate for EVTC’s 2023 EPS indicates a year-over-year increase of 6.8%.
Envestnet’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 5.04%. The Zacks Consensus Estimate for Envestnet’s 2023 earnings has moved 0.9% north in the past seven days.
The Zacks Consensus Estimate for ENV’s 2023 EPS indicates a year-over-year increase of 14%. In the past year, ENV has lost 18.1%.