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Bread Financial (BFH) Q3 Earnings In Line, Credit Sales Rise
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Bread Financial Holdings’ (BFH - Free Report) operating earnings of $2.69 per share for the third quarter of 2022 were in line with the Zacks Consensus Estimate but missed our estimate of $3.11. The bottom line plunged 39.8% year over year.
Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Revenues increased 15% year over year to $979 million, resulting from higher average loan balances and improved loan yields. The top line missed the consensus estimate by 0.6% but surpassed our estimate of $937 million.
Credit sales increased 4% to $7.7 billion, driven by existing partners, as well as new product and brand partner additions. Average receivables of $17.6 billion were up 14% year over year.
Total interest income increased 22.5% to $1.2 billion and beat our estimate of $1.1 billion. The net interest margin expanded 100 basis points to 19.9%.
Total non-interest expenses increased 13% to $486 million, primarily attributable to an increase in compensation and benefit expense and information processing and communication expenses. Our estimate was $477.1 million.
The delinquency rate of 5.7% deteriorated 290 basis points year over year, while the net loss rate of 5% deteriorated 100 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 17% year over year to $420 million, reflecting profitable growth and continued success with business transformation efforts. Our estimate was $460.1 million.
Financial Update
As of Sep 30, 2022, cash and cash equivalents were $3.6 billion, up 17.6% from the 2021 level.
At quarter-end, the debt level was down 3.5% from 2021-end to about $2 billion.
Tangible book value of $34.30 per share as of Sep 30, 2022 improved 10% over 2021 end.
Cash from operations increased 11.8% year over year to $1.4 billion in the first nine months of 2022. Capital expenditure at Bread Financial decreased 10.2% year over year to $53 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Dec 16 to stockholders of record as of Nov 14.
Guidance
Management estimates average receivables growth in the low double-digit range from the 2021 level.
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 sequentially increase in the fourth quarter of 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 high end of the low-to-mid 5% range.
Mastercard Incorporated (MA - Free Report) reported third-quarter 2022 adjusted earnings of $2.68 per share, which outpaced the Zacks Consensus Estimate by 4.3%. The bottom line advanced 13% year over year. Revenues of $5.8 billion rose 15% year over year and beat the consensus mark by 1.8%.
Gross Dollar Volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) improved 11% year over year on a local-currency basis to $2.1 trillion. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) soared 44% year over year on a local-currency basis. Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, came in at 32.4 billion. The metric rose 9% year over year.
Visa Inc.’s (V - Free Report) fourth-quarter fiscal 2022 earnings of $1.93 per share outpaced the Zacks Consensus Estimate of $1.86 and our estimate of $1.83. The bottom line climbed 19% year over year. Net revenues improved 19% year over year to $7,787 million during the September quarter. The top line beat the Zacks Consensus Estimate of $7,544 million and our estimate of $7,547.9 million.
On a constant-dollar basis, the payments volume of Visa rose 10% year over year. Processed transactions (implying transactions processed by Visa) advanced 12% year over year to 50.9 billion, despite inflation and rising interest rate worries, beating our estimate of 49.5 billion.
The total cross-border volume of Visa, on a constant dollar basis, rose 36% year over year in the quarter under review. Excluding transactions within Europe, V’s cross-border volume (that usually boosts the company’s international transaction revenues) grew 49% year over year on a constant-dollar basis.
Upcoming Release
Global Payments (GPN - Free Report) is set to report third-quarter 2022 results on Oct 31. The Zacks Consensus Estimate for the third quarter is pegged at $2.49, indicating an increase of 14.2% from the year-ago reported figure.
Global Payments delivered an earnings surprise in each of the last four quarters.
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Bread Financial (BFH) Q3 Earnings In Line, Credit Sales Rise
Bread Financial Holdings’ (BFH - Free Report) operating earnings of $2.69 per share for the third quarter of 2022 were in line with the Zacks Consensus Estimate but missed our estimate of $3.11. The bottom line plunged 39.8% 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 $979 million, resulting from higher average loan balances and improved loan yields. The top line missed the consensus estimate by 0.6% but surpassed our estimate of $937 million.
Credit sales increased 4% to $7.7 billion, driven by existing partners, as well as new product and brand partner additions. Average receivables of $17.6 billion were up 14% year over year.
Total interest income increased 22.5% to $1.2 billion and beat our estimate of $1.1 billion. The net interest margin expanded 100 basis points to 19.9%.
Total non-interest expenses increased 13% to $486 million, primarily attributable to an increase in compensation and benefit expense and information processing and communication expenses. Our estimate was $477.1 million.
The delinquency rate of 5.7% deteriorated 290 basis points year over year, while the net loss rate of 5% deteriorated 100 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 17% year over year to $420 million, reflecting profitable growth and continued success with business transformation efforts. Our estimate was $460.1 million.
Financial Update
As of Sep 30, 2022, cash and cash equivalents were $3.6 billion, up 17.6% from the 2021 level.
At quarter-end, the debt level was down 3.5% from 2021-end to about $2 billion.
Tangible book value of $34.30 per share as of Sep 30, 2022 improved 10% over 2021 end.
Cash from operations increased 11.8% year over year to $1.4 billion in the first nine months of 2022. Capital expenditure at Bread Financial decreased 10.2% year over year to $53 million in the same period.
Dividend Update
The board of directors approved a quarterly dividend of 21 cents to be paid out on Dec 16 to stockholders of record as of Nov 14.
Guidance
Management estimates average receivables growth in the low double-digit range from the 2021 level.
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 sequentially increase in the fourth quarter of 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 high end of 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 Industry Players
Mastercard Incorporated (MA - Free Report) reported third-quarter 2022 adjusted earnings of $2.68 per share, which outpaced the Zacks Consensus Estimate by 4.3%. The bottom line advanced 13% year over year. Revenues of $5.8 billion rose 15% year over year and beat the consensus mark by 1.8%.
Gross Dollar Volume (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) improved 11% year over year on a local-currency basis to $2.1 trillion. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) soared 44% year over year on a local-currency basis. Switched transactions, which indicate the number of times a company’s products are used to facilitate transactions, came in at 32.4 billion. The metric rose 9% year over year.
Visa Inc.’s (V - Free Report) fourth-quarter fiscal 2022 earnings of $1.93 per share outpaced the Zacks Consensus Estimate of $1.86 and our estimate of $1.83. The bottom line climbed 19% year over year. Net revenues improved 19% year over year to $7,787 million during the September quarter. The top line beat the Zacks Consensus Estimate of $7,544 million and our estimate of $7,547.9 million.
On a constant-dollar basis, the payments volume of Visa rose 10% year over year. Processed transactions (implying transactions processed by Visa) advanced 12% year over year to 50.9 billion, despite inflation and rising interest rate worries, beating our estimate of 49.5 billion.
The total cross-border volume of Visa, on a constant dollar basis, rose 36% year over year in the quarter under review. Excluding transactions within Europe, V’s cross-border volume (that usually boosts the company’s international transaction revenues) grew 49% year over year on a constant-dollar basis.
Upcoming Release
Global Payments (GPN - Free Report) is set to report third-quarter 2022 results on Oct 31. The Zacks Consensus Estimate for the third quarter is pegged at $2.49, indicating an increase of 14.2% from the year-ago reported figure.
Global Payments delivered an earnings surprise in each of the last four quarters.