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Should You Hold Bread Financial (BFH) Stock in Your Portfolio?
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Bread Financial Holdings, Inc. (BFH - Free Report) is poised for growth on solid consumer spending, growing retained earnings, strategic investments and capital deployment.
Earnings Surprise History
Bread Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
The Zacks Consensus Estimate for Bread Financial’s 2023 earnings per share is pegged at $11.59, indicating a year-over-year increase of 51.9%.
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.
For 2022, Bread Financial expects the ongoing Fed interest rate increase to result in a nominal benefit to total net interest income. Average loans are expected to grow in the low double-digit range relative to 2021, driven by strong sales activity.
Credit metrics should continue to 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.
Bread Financial expects credit metrics to normalize in 2022 from historically low rates yet remain below its historical through-the-cycle average of approximately 6%. It continues to project the loss rate to be in the low to mid-5% range for 2022.
Bread Financial 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 this regard 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. On Feb 28, 2022, its board approved a stock 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 Jun 30, 2022, BFH had repurchased the shares available under this program for an aggregate of $12 million.
Price Performance
Year to date, the stock has declined 42% compared with the industry’s decline of 12.3%.
Mastercard’s earnings surpassed estimates in each of the last four quarters, the average beat being 12.92%. Year to date, MA has declined 8.8%.
The Zacks Consensus Estimate for MA’s 2022 and 2023 EPS indicates a year-over-year increase of 26.9% and 18.7%, respectively.
International Money’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 13.77%. Year to date, International Money has increased 42.5%.
The Zacks Consensus Estimate for IMXI’s 2022 and 2023 EPS indicates a year-over-year increase of 18.4% and 13.8%, respectively.
The bottom line of Visa surpassed earnings estimates in each of the last four quarters, the average being 8.81%. Year to date, V has decreased 7.1%.
The Zacks Consensus Estimate for Visa’s 2022 and 2023 EPS indicates a year-over-year increase of 25.2% and 13.2%, respectively.
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Should You Hold Bread Financial (BFH) Stock in Your Portfolio?
Bread Financial Holdings, Inc. (BFH - Free Report) is poised for growth on solid consumer spending, growing retained earnings, strategic investments and capital deployment.
Earnings Surprise History
Bread Financial has a solid track record of beating earnings estimates in five of the last seven quarters.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
The Zacks Consensus Estimate for Bread Financial’s 2023 earnings per share is pegged at $11.59, indicating a year-over-year increase of 51.9%.
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.
For 2022, Bread Financial expects the ongoing Fed interest rate increase to result in a nominal benefit to total net interest income. Average loans are expected to grow in the low double-digit range relative to 2021, driven by strong sales activity.
Credit metrics should continue to 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.
Bread Financial expects credit metrics to normalize in 2022 from historically low rates yet remain below its historical through-the-cycle average of approximately 6%. It continues to project the loss rate to be in the low to mid-5% range for 2022.
Bread Financial 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 this regard 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. On Feb 28, 2022, its board approved a stock 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 Jun 30, 2022, BFH had repurchased the shares available under this program for an aggregate of $12 million.
Price Performance
Year to date, the stock has declined 42% compared with the industry’s decline of 12.3%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked financial transaction service providers are Mastercard Incorporated (MA - Free Report) , International Money Express, Inc. (IMXI - Free Report) and Visa Inc. (V - 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.
Mastercard’s earnings surpassed estimates in each of the last four quarters, the average beat being 12.92%. Year to date, MA has declined 8.8%.
The Zacks Consensus Estimate for MA’s 2022 and 2023 EPS indicates a year-over-year increase of 26.9% and 18.7%, respectively.
International Money’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 13.77%. Year to date, International Money has increased 42.5%.
The Zacks Consensus Estimate for IMXI’s 2022 and 2023 EPS indicates a year-over-year increase of 18.4% and 13.8%, respectively.
The bottom line of Visa surpassed earnings estimates in each of the last four quarters, the average being 8.81%. Year to date, V has decreased 7.1%.
The Zacks Consensus Estimate for Visa’s 2022 and 2023 EPS indicates a year-over-year increase of 25.2% and 13.2%, respectively.