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Bread Financial (BFH) Q1 Earnings Lag Estimates, Revenues Top
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Bread Financial Holdings’ (BFH - Free Report) operating earnings of $4.21 per share for the first quarter of 2022 missed the Zacks Consensus Estimate of $4.50. The bottom line plunged 33% year over year.
Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Revenues increased 15% year over year to $921 million, resulting from higher average receivables balances, improved loan yields, and continued improvement in the cost of funds. The top line beat the consensus estimate by 1.4%.
Credit sales increased 14% to $6.9 billion as consumer spending continues to recover. Average receivables of $16.7 billion were up 5% year over year.
Total interest income increased 13.4% to $1.1 billion. The net interest margin expanded 170 basis points to 19.4%.
Total non-interest expenses increased 6%, primarily attributable to increased salaries, continued digital and technology modernization-related hiring, and higher volume-related staffing levels.
The delinquency rate of 4.1% deteriorated 30 basis points year over year, while the net loss rate of 4.8% improved 20 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 24% year over year to $495 million, reflecting profitable loan growth and improved funding cost.
Financial Update
As of Mar 31, 2022, cash and cash equivalents was $2.9 billion, down 3.8% from Mar 31, 2021-level.
At quarter-end, the debt level was down 1.2% from 2021-end to about $2 billion.
Tangible book value of $31.87 per share as of Mar 31, 2022 improved 49.5% over 2021 end.
Cash from operations decreased 3.9% year over year to $497 million in the reported quarter. Capital expenditure at Bread Financial increased 66.7% year over year to $20 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Jun 17 to stockholders of record as of May 13.
BFH bought back 0.2 million shares in the first quarter of 2022.
2022 Guidance
Management estimates average receivables growth in the low double-digit range from the 2021 level compared with the high-single to low-double-digit range expected earlier.
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’s (MA - Free Report) first-quarter 2022 earnings of $2.76 per share outpaced the Zacks Consensus Estimate by 27.2% and surged 59% year over year. Revenues of $5.2 billion improved 24% year over year and beat the consensus mark by 5.4%.
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) came in at $1.9 trillion, which climbed 17% year over year in the first quarter. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) surged 53% year over year on a local-currency basis. Mastercard’s switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, advanced 22% year over year to nearly 29 million.
Visa Inc.’s (V - Free Report) second-quarter fiscal 2022 earnings of $1.79 per share beat the Zacks Consensus Estimate by 8.5% and improved 30% year over year. Net revenues of $7.2 billion climbed 25% year over year and outpaced the consensus mark by 5.1%.
Payments volume of Visa on a constant-dollar basis climbed 17% year over year. On a constant-dollar basis, the total cross-border volume of Visa improved 38% year over year.
Upcoming Release
Global Payments (GPN - Free Report) is set to report first-quarter 2022 results on May 2. The Zacks Consensus Estimate for the first quarter is pegged at $2.04, indicating an increase of 12.1% from the year-ago reported figure.
Global Payments delivered an earnings surprise in all the four quarters of 2021.
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Bread Financial (BFH) Q1 Earnings Lag Estimates, Revenues Top
Bread Financial Holdings’ (BFH - Free Report) operating earnings of $4.21 per share for the first quarter of 2022 missed the Zacks Consensus Estimate of $4.50. The bottom line plunged 33% 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 increased 15% year over year to $921 million, resulting from higher average receivables balances, improved loan yields, and continued improvement in the cost of funds. The top line beat the consensus estimate by 1.4%.
Credit sales increased 14% to $6.9 billion as consumer spending continues to recover. Average receivables of $16.7 billion were up 5% year over year.
Total interest income increased 13.4% to $1.1 billion. The net interest margin expanded 170 basis points to 19.4%.
Total non-interest expenses increased 6%, primarily attributable to increased salaries, continued digital and technology modernization-related hiring, and higher volume-related staffing levels.
The delinquency rate of 4.1% deteriorated 30 basis points year over year, while the net loss rate of 4.8% improved 20 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 24% year over year to $495 million, reflecting profitable loan growth and improved funding cost.
Financial Update
As of Mar 31, 2022, cash and cash equivalents was $2.9 billion, down 3.8% from Mar 31, 2021-level.
At quarter-end, the debt level was down 1.2% from 2021-end to about $2 billion.
Tangible book value of $31.87 per share as of Mar 31, 2022 improved 49.5% over 2021 end.
Cash from operations decreased 3.9% year over year to $497 million in the reported quarter. Capital expenditure at Bread Financial increased 66.7% year over year to $20 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Jun 17 to stockholders of record as of May 13.
BFH bought back 0.2 million shares in the first quarter of 2022.
2022 Guidance
Management estimates average receivables growth in the low double-digit range from the 2021 level compared with the high-single to low-double-digit range expected earlier.
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’s (MA - Free Report) first-quarter 2022 earnings of $2.76 per share outpaced the Zacks Consensus Estimate by 27.2% and surged 59% year over year. Revenues of $5.2 billion improved 24% year over year and beat the consensus mark by 5.4%.
Gross dollar volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) came in at $1.9 trillion, which climbed 17% year over year in the first quarter. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) surged 53% year over year on a local-currency basis. Mastercard’s switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, advanced 22% year over year to nearly 29 million.
Visa Inc.’s (V - Free Report) second-quarter fiscal 2022 earnings of $1.79 per share beat the Zacks Consensus Estimate by 8.5% and improved 30% year over year. Net revenues of $7.2 billion climbed 25% year over year and outpaced the consensus mark by 5.1%.
Payments volume of Visa on a constant-dollar basis climbed 17% year over year. On a constant-dollar basis, the total cross-border volume of Visa improved 38% year over year.
Upcoming Release
Global Payments (GPN - Free Report) is set to report first-quarter 2022 results on May 2. The Zacks Consensus Estimate for the first quarter is pegged at $2.04, indicating an increase of 12.1% from the year-ago reported figure.
Global Payments delivered an earnings surprise in all the four quarters of 2021.