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Here's Why Hold Strategy is Apt for Bread Financial (BFH) Now
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Bread Financial Holdings, Inc. (BFH - Free Report) has been in investors’ good books because of higher retained earnings, active risk management, solid consumer spending and capital deployment.
Growth Projections
The Zacks Consensus Estimate for Bread Financial’s 2023 earnings is pegged at $12.98 per share, indicating a 190.38% increase from the year-ago reported figure, driven by 11% higher revenues of $4.25 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 has moved up nearly 0.4% in the past 60 days, reflecting investors’ optimism.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Earnings Surprise History
BFH surpassed earnings estimates in each of the last four quarters, the average being 139.93%.
Style Score
Bread Financial has a favorable VGM Score of A. The VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Return on Equity
Bread Financial’s return on average equity of 24.8% in the third quarter of 2023 expanded 200 basis points year over year. Return on equity is a profitability measure that shows how efficiently a company is utilizing shareholders’ money.
Business Tailwinds
The credit sales performance is expected to improve on the back of solid consumer spending. With the 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.
Capital ratios are likely to improve on the back of a 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.
BFH 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.
Key Concerns
Bread Financial expects fourth-quarter expenses to be higher than the third quarter, attributable to increased seasonal marketing and employee benefits costs. It also estimates depreciation and amortization expenses to a run rate below $25 million per quarter as the capitalized software development project reached the end of its useful life in the second quarter of 2023.
Price Performance
In the past year, the stock has lost 22.9% against the industry’s rise of 17%. Strong fundamentals of Bread Financial are likely to help the stock bounce back.
Shift4 Payments’ earnings surpassed estimates in each of the last four quarters, the average being 25.03%. In the past year, FOUR has gained 45.6%.
The Zacks Consensus Estimate for FOUR’s 2023 and 2024 earnings indicates a respective year-over-year increase of 110% and 28.9%.
OppFi earnings surpassed estimates in three of the last four quarters and missed in one, the average being 383.33%. In the past year, OPFI has gained 64.3%.
The Zacks Consensus Estimate for OPFI’s 2023 and 2024 earnings indicates a respective year-over-year increase of 700% and 47.9%.
FirstCash’s earnings surpassed estimates in each of the last four quarters, the average being 7.86%. In the past year, FCFS has gained 26.2%.
The Zacks Consensus Estimate for FCFS’ 2023 and 2024 earnings indicates a respective year-over-year increase of 13.1% and 21.8%.
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Here's Why Hold Strategy is Apt for Bread Financial (BFH) Now
Bread Financial Holdings, Inc. (BFH - Free Report) has been in investors’ good books because of higher retained earnings, active risk management, solid consumer spending and capital deployment.
Growth Projections
The Zacks Consensus Estimate for Bread Financial’s 2023 earnings is pegged at $12.98 per share, indicating a 190.38% increase from the year-ago reported figure, driven by 11% higher revenues of $4.25 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2023 has moved up nearly 0.4% in the past 60 days, reflecting investors’ optimism.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Earnings Surprise History
BFH surpassed earnings estimates in each of the last four quarters, the average being 139.93%.
Style Score
Bread Financial has a favorable VGM Score of A. The VGM Score helps identify stocks with the most attractive value, best growth and most promising momentum.
Return on Equity
Bread Financial’s return on average equity of 24.8% in the third quarter of 2023 expanded 200 basis points year over year. Return on equity is a profitability measure that shows how efficiently a company is utilizing shareholders’ money.
Business Tailwinds
The credit sales performance is expected to improve on the back of solid consumer spending. With the 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.
Capital ratios are likely to improve on the back of a 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.
BFH 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.
Key Concerns
Bread Financial expects fourth-quarter expenses to be higher than the third quarter, attributable to increased seasonal marketing and employee benefits costs. It also estimates depreciation and amortization expenses to a run rate below $25 million per quarter as the capitalized software development project reached the end of its useful life in the second quarter of 2023.
Price Performance
In the past year, the stock has lost 22.9% against the industry’s rise of 17%. Strong fundamentals of Bread Financial are likely to help the stock bounce back.
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Stocks to Consider
Some better-ranked financial transaction service providers are Shift4 Payments, Inc. (FOUR - Free Report) , OppFi Inc. (OPFI - Free Report) and FirstCash Holdings, Inc. (FCFS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Shift4 Payments’ earnings surpassed estimates in each of the last four quarters, the average being 25.03%. In the past year, FOUR has gained 45.6%.
The Zacks Consensus Estimate for FOUR’s 2023 and 2024 earnings indicates a respective year-over-year increase of 110% and 28.9%.
OppFi earnings surpassed estimates in three of the last four quarters and missed in one, the average being 383.33%. In the past year, OPFI has gained 64.3%.
The Zacks Consensus Estimate for OPFI’s 2023 and 2024 earnings indicates a respective year-over-year increase of 700% and 47.9%.
FirstCash’s earnings surpassed estimates in each of the last four quarters, the average being 7.86%. In the past year, FCFS has gained 26.2%.
The Zacks Consensus Estimate for FCFS’ 2023 and 2024 earnings indicates a respective year-over-year increase of 13.1% and 21.8%.