We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
BFH Stock Trading at a Discount to Industry at 7.96X: Time to Buy?
Read MoreHide Full Article
Key Takeaways
BFH expects credit sales growth from solid consumer spending, new partners and holiday demand.
Strong credit quality and proactive risk management are helping keep loss rates below historical averages.
Investments in digital capabilities, balance sheet strength and share buybacks support future growth.
Bread Financial Holdings, Inc. (BFH - Free Report) shares are trading at a discount compared with the Zacks Financial - Miscellaneous Services industry. Its forward price-to-earnings multiple of 7.96X is lower than the industry average of 10X, the Finance sector’s 15.81X, and the Zacks S&P 500 Composite’s 22.7X. The insurer has a Value Score of A.
The insurer has a market capitalization of $3.57 billion. The average volume of shares traded in the last three months was 0.6 million.
Image Source: Zacks Investment Research
Shares of Virtu Financial, Inc. (VIRT - Free Report) and LendingClub Corporation (LC - Free Report) are also trading at a discount to the industry average, while American Express Company (AXP - Free Report) is trading at a premium.
BFH is an Outperformer
Shares of Bread Financial have surged 78.8% in the past year, outperforming the Finance sector and the Zacks S&P 500 composite’s growth of 12.8% and 31.7%, respectively. The Zacks Financial - Miscellaneous Services industry has lost 16.2% in the said time frame.
Image Source: Zacks Investment Research
BFH Trading Above 50-Day and 200-Day Moving Averages
Shares of Bread Financial closed at $88.36 on Wednesday and are trading above the 50-day and 200-day simple moving averages (SMA) of $83.67 and $71.86, respectively, indicating solid upward momentum. The SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
BFH’s Encouraging Growth Projection
The Zacks Consensus Estimate for Bread Financial’s 2026 revenues is pegged at $3.94 billion, implying a year-over-year improvement of 2.5%. The consensus estimate for 2027 earnings per share and revenues indicates an increase of 11.2% and 3.5%, respectively, from the corresponding 2026 estimates.
Optimist Analyst Sentiment on BFH
One of the six analysts covering the stock has raised estimates for 2026, and two of the seven analysts have raised the same for 2027 over the past 30 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved up 1.5% and 0.1%, respectively, in the past 30 days.
Factors Acting in Favor of BFH
The credit sales performance is expected to improve on the back of solid consumer spending. With the continued growth in 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 is prudently investing in strategic growth areas and ramping up marketing spending across growth verticals, digital innovation and technology enhancements. Bread Financial stated that ramping up its digital and technology capabilities remains a top priority this year. It has strategic relationships leveraging BFH’s versatile mono platform, including RBC, Fiserv and Sezzle.
The company has been strengthening its balance sheet and lowering debt. Notably, its free cash flow conversion has been impressive over the last several quarters, reflecting its solid earnings.
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, mergers and acquisitions.
End Notes
Robust credit sales, higher retained earnings, active risk management, solid consumer spending and capital deployment should continue to favor Bread Financial over the long term.
BFH also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers.
Higher return on capital, favorable growth estimates and attractive valuations should continue to benefit Bread Financial over the long term. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Shutterstock
BFH Stock Trading at a Discount to Industry at 7.96X: Time to Buy?
Key Takeaways
Bread Financial Holdings, Inc. (BFH - Free Report) shares are trading at a discount compared with the Zacks Financial - Miscellaneous Services industry. Its forward price-to-earnings multiple of 7.96X is lower than the industry average of 10X, the Finance sector’s 15.81X, and the Zacks S&P 500 Composite’s 22.7X. The insurer has a Value Score of A.
The insurer has a market capitalization of $3.57 billion. The average volume of shares traded in the last three months was 0.6 million.
Image Source: Zacks Investment Research
Shares of Virtu Financial, Inc. (VIRT - Free Report) and LendingClub Corporation (LC - Free Report) are also trading at a discount to the industry average, while American Express Company (AXP - Free Report) is trading at a premium.
BFH is an Outperformer
Shares of Bread Financial have surged 78.8% in the past year, outperforming the Finance sector and the Zacks S&P 500 composite’s growth of 12.8% and 31.7%, respectively. The Zacks Financial - Miscellaneous Services industry has lost 16.2% in the said time frame.
Image Source: Zacks Investment Research
BFH Trading Above 50-Day and 200-Day Moving Averages
Shares of Bread Financial closed at $88.36 on Wednesday and are trading above the 50-day and 200-day simple moving averages (SMA) of $83.67 and $71.86, respectively, indicating solid upward momentum. The SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
BFH’s Encouraging Growth Projection
The Zacks Consensus Estimate for Bread Financial’s 2026 revenues is pegged at $3.94 billion, implying a year-over-year improvement of 2.5%.
The consensus estimate for 2027 earnings per share and revenues indicates an increase of 11.2% and 3.5%, respectively, from the corresponding 2026 estimates.
Optimist Analyst Sentiment on BFH
One of the six analysts covering the stock has raised estimates for 2026, and two of the seven analysts have raised the same for 2027 over the past 30 days. Thus, the Zacks Consensus Estimate for 2026 and 2027 earnings has moved up 1.5% and 0.1%, respectively, in the past 30 days.
Factors Acting in Favor of BFH
The credit sales performance is expected to improve on the back of solid consumer spending. With the continued growth in 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 is prudently investing in strategic growth areas and ramping up marketing spending across growth verticals, digital innovation and technology enhancements. Bread Financial stated that ramping up its digital and technology capabilities remains a top priority this year. It has strategic relationships leveraging BFH’s versatile mono platform, including RBC, Fiserv and Sezzle.
The company has been strengthening its balance sheet and lowering debt. Notably, its free cash flow conversion has been impressive over the last several quarters, reflecting its solid earnings.
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, mergers and acquisitions.
End Notes
Robust credit sales, higher retained earnings, active risk management, solid consumer spending and capital deployment should continue to favor Bread Financial over the long term.
BFH also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers.
Higher return on capital, favorable growth estimates and attractive valuations should continue to benefit Bread Financial over the long term. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.