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Here's Why Should You Hold Bread Financial (BFH) Stock Now

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Bread Financial Holdings, Inc. (BFH - Free Report) has been gaining momentum on the back of new business activities, strong credit sales, strategic investments and capital deployment.

Earnings Surprise History

Bread Financial has a solid track record of beating earnings estimates in six of the last seven quarters.

Zacks Rank

Bread Financial currently carries a Zacks Rank #3 (Hold).

Style Score

Bread Financial is well-poised for progress as evident from its favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.

Business Tailwinds

The Zacks Consensus Estimate for Bread Financials’ 2023 earnings per share is pegged at $12, indicating a year-over-year increase of 8%.

For 2022, average loans are projected to grow low double digits, increasing from the earlier guidance of high single to low-double digits. Riding on the success of new business activities, BFH expects year-over-year loan growth to be stronger than average loan growth by the end of 2022.

The credit sales performance is expected to improve, riding on solid consumer spending. With the economy recovering from pandemic-related disruptions and the continued growth of credit sales, average loans are likely to increase.

Credit metrics continued to remain strong with improved delinquency rate and net loss rate. Bread Financial expects credit metrics to begin to gradually normalize throughout 2022 and continues to project the loss rate will be in the low to mid-5% range for 2022.

As per strategic initiatives, Bread Financial should continue to invest in digital platform, product innovation, marketing efforts and technology modernization including a planned incremental investment of more than $125 million in 2022. In 2022, BFH intends to complete the conversion of the core processing system to Fiserv, to leverage new capabilities to drive both revenue opportunities as well as operating efficiencies.

Capital ratios are likely to improve on the back of growing 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 Mar 31, 2022, the company had repurchased shares under this program for $12 million.

Price Performance

Year to date, the stock has declined 29.3% compared with the industry’s decline of 11.2%.

Zacks Investment Research
Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked financial transaction service providers are Cantaloupe, Inc. (CTLP - Free Report) , International Money Express, Inc. (IMXI - Free Report) and Green Dot Corporation (GDOT - 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.

Cantaloupe’s earnings surpassed estimates in each of the last four quarters, the average beat being 125%. Year to date, Cantaloupe has declined 43.8%.

The Zacks Consensus Estimate for CTLP’s 2022 and 2023 EPS indicates a year-over-year increase of 85.7% and 275%, respectively.

International Money’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 16.93%. Year to date, International Money has increased 20.1%.

The Zacks Consensus Estimate for IMXI’s 2022 EPS indicates a year-over-year increase of 17.6%.

The bottom line of Green Dot surpassed earnings estimates in three of the last four quarters, the average being 20.5%. Year to date, GDOT has decreased 25.3%.

The Zacks Consensus Estimate for GDOT’s 2022 and 2023 EPS indicates a year-over-year increase of 8.6% and 20.2%, respectively.

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