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Bread Financial (BFH) Up 43.3% in a Year: Will the Rally Last?
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Bread Financial Holdings, Inc.’s (BFH - Free Report) shares have soared 43.3% in a year compared with the industry's growth of 16.6%. The Finance sector and the Zacks S&P 500 index have gained 23.5% and 24.8% in the said time frame, respectively. With a market capitalization of $2.04 billion, the average volume of shares traded in the last three months was 0.8 million.
Image Source: Zacks Investment Research
The rally was largely driven by solid credit sales and consumer spending, active risk management, strategic growth initiatives and capital deployment.
Bread Financial has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
This Financial Transaction Services stock carries a Zacks Rank #3 (Hold) at present. The company’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 180.85%.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Bread Financial’s 2025 earnings per share and revenues indicates an increase of 22% and 0.2%, respectively, from the corresponding 2024 estimates.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 7.9% and 1.3% north, respectively, in the past 30 days, reflecting analysts’ optimism.
The expected long-term earnings growth rate is 39.2%, outperforming the industry average of 18.3%.
The credit sales performance is expected to improve on the back of solid consumer spending. With the continued growth of 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 in growth verticals and 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. Leverage improved to 118% at the end of the first quarter of 2024. Bread Financial also intends to pay $100 million remaining in its 2026 bonds by the end of this year to further improve leverage.
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 and mergers and acquisitions. On Feb 21, 2024, the board approved a $30 million repurchase program, of which $11 million was exhausted in the first quarter of 2024.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Financial Transaction Services sector are MoneyLion Inc. (ML - Free Report) , RB Global, Inc. (RBA - Free Report) and Global Payments Inc. (GPN - Free Report) . While MoneyLion and RB Global sport a Zacks Rank #1 (Strong Buy), Global Payments carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
MoneyLion has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 116.37%. In the past year, shares of ML have skyrocketed 822.9%.
The Zacks Consensus Estimate for ML’s 2024 and 2025 earnings implies year-over-year growth of 131.3% and 280%, respectively.
RB Global has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 23.18%. In the past year, shares of RBA have climbed 39.1%.
The Zacks Consensus Estimate for RBA’s 2024 and 2025 earnings implies year-over-year growth of 10% and 9.1%, respectively.
Global Payments has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 1.14%. In the past year, shares of GPN have inched up 1.8%.
The Zacks Consensus Estimate for GPN’s 2024 and 2025 earnings implies year-over-year growth of 11.6% and 13.6%, respectively.
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Bread Financial (BFH) Up 43.3% in a Year: Will the Rally Last?
Bread Financial Holdings, Inc.’s (BFH - Free Report) shares have soared 43.3% in a year compared with the industry's growth of 16.6%. The Finance sector and the Zacks S&P 500 index have gained 23.5% and 24.8% in the said time frame, respectively. With a market capitalization of $2.04 billion, the average volume of shares traded in the last three months was 0.8 million.
Image Source: Zacks Investment Research
The rally was largely driven by solid credit sales and consumer spending, active risk management, strategic growth initiatives and capital deployment.
Bread Financial has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
This Financial Transaction Services stock carries a Zacks Rank #3 (Hold) at present. The company’s earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 180.85%.
Will the Bull Run Continue?
The Zacks Consensus Estimate for Bread Financial’s 2025 earnings per share and revenues indicates an increase of 22% and 0.2%, respectively, from the corresponding 2024 estimates.
The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 7.9% and 1.3% north, respectively, in the past 30 days, reflecting analysts’ optimism.
The expected long-term earnings growth rate is 39.2%, outperforming the industry average of 18.3%.
The credit sales performance is expected to improve on the back of solid consumer spending. With the continued growth of 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 in growth verticals and 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. Leverage improved to 118% at the end of the first quarter of 2024. Bread Financial also intends to pay $100 million remaining in its 2026 bonds by the end of this year to further improve leverage.
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 and mergers and acquisitions. On Feb 21, 2024, the board approved a $30 million repurchase program, of which $11 million was exhausted in the first quarter of 2024.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Financial Transaction Services sector are MoneyLion Inc. (ML - Free Report) , RB Global, Inc. (RBA - Free Report) and Global Payments Inc. (GPN - Free Report) . While MoneyLion and RB Global sport a Zacks Rank #1 (Strong Buy), Global Payments carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
MoneyLion has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 116.37%. In the past year, shares of ML have skyrocketed 822.9%.
The Zacks Consensus Estimate for ML’s 2024 and 2025 earnings implies year-over-year growth of 131.3% and 280%, respectively.
RB Global has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 23.18%. In the past year, shares of RBA have climbed 39.1%.
The Zacks Consensus Estimate for RBA’s 2024 and 2025 earnings implies year-over-year growth of 10% and 9.1%, respectively.
Global Payments has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 1.14%. In the past year, shares of GPN have inched up 1.8%.
The Zacks Consensus Estimate for GPN’s 2024 and 2025 earnings implies year-over-year growth of 11.6% and 13.6%, respectively.