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Bread Financial (BFH) Q2 Earnings Top, Revenues Fall Y/Y
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BreadFinancial Holdings’ (BFH - Free Report) operating income of $2.66 per share for the second quarter of 2024 beat the Zacks Consensus Estimate of $1.60. The bottom line more than doubled year over year.
The quarterly results reflected a drop in credit sales but average loans slightly improved on growth in co-brand programs. The company noted that consumer spending continues to moderate, given persistent inflation and higher interest rates. Loan growth was impacted by proactive credit tightening initiatives, given stricter credit risk management due to economic pressure that affected consumer spending and payment capacity.
Behind the Headlines
Revenues decreased 1.4% year over year to $939 million, attributable to reduced merchant discount fees resulting from lower big-ticket credit sales. The top line, however, beat the consensus estimate by 2.2%.
Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Credit sales of $6 billion decreased 7% year over year, reflecting moderating consumer spending and strategic credit tightening, partially offset by new partner growth. Our estimate for the metric was pegged at $6.3 billion.
The average loan amount was $17.9 billion, an increase of 1% year over year, driven by ongoing growth in co-brand programs. Our estimate for the same was $17.6 billion.
Total interest income decreased 38.5% to $1.2 billion, in line with our estimate and the Zacks Consensus Estimate.
Net interest margin contracted 70 basis points to 18%. The Zacks Consensus Estimate and our estimate for the metric were 18% and 19.4%, respectively.
Total non-interest expenses decreased 11.5% to $469 million, primarily attributable to a decrease in employee compensation and benefits, card and processing expenses and employee compensation and benefit costs, as well as marketing expenses. Our estimate for the same was pegged at $507.2 million.
The delinquency rate of 6% deteriorated 50 basis points year over year. The net loss rate of 8.6% deteriorated 60 basis points.
Pre-tax pre-provision earnings increased 11.4% year over year to $420 million. Our estimate for the same was $418 million.
Financial Update
As of Jun 30, 2024, cash and cash equivalents were $4.1 billion, up 12.9% from the 2023 level.
In second-quarter 2024, long-term debt and other debt declined 7% from the 2023-end level to $1.3 billion.
Tangible book value was $48.89 per share as of Jun 30, 2024, up 25% year over year.
Return on average equity was 16.7%, which expanded 730 basis points year over year.
Cash from operations for the first half of 2024 increased 24.7% year over year to $924 billion.
Capital Deployment
The board also approved a quarterly dividend of 21 cents to be paid out on Sep 13 to stockholders of record as of Aug 9. The company bought back shares worth $11 million.
2024 Guidance
Management estimates average receivables to decline in the low single-digit range from the 2023 level. It expects 2024 average credit card and other loans to be down in low single digits from the 2023 level.
Total revenues are estimated to decline in low-to-mid single digits.
Total non-interest expenses are estimated to decline in low mid-single digits.
The Western Union Company (WU - Free Report) will report second-quarter 2024 results on Jul 30. The Zacks Consensus Estimate for second-quarter earnings is pegged at 44 cents per share, indicating a decrease of 13.7% from the year-ago quarter’s reported figure.
WU’s earnings beat estimates in each of the trailing four quarters.
Mastercard Incorporated (MA - Free Report) will report second-quarter 2024 results on Jul 31. The Zacks Consensus Estimate for second-quarter earnings is pegged at $3.51 per share, indicating an increase of 21.5% from the year-ago quarter’s reported figure.
MA’s earnings beat estimates in each of the trailing four quarters.
Global Payments (GPN - Free Report) will report second-quarter 2024 results on Aug 7. The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.91 per share, indicating an increase of 11.1% from the year-ago quarter’s reported figure.
GPN’s earnings beat estimates in each of the trailing four quarters.
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Bread Financial (BFH) Q2 Earnings Top, Revenues Fall Y/Y
Bread Financial Holdings’ (BFH - Free Report) operating income of $2.66 per share for the second quarter of 2024 beat the Zacks Consensus Estimate of $1.60. The bottom line more than doubled year over year.
The quarterly results reflected a drop in credit sales but average loans slightly improved on growth in co-brand programs. The company noted that consumer spending continues to moderate, given persistent inflation and higher interest rates. Loan growth was impacted by proactive credit tightening initiatives, given stricter credit risk management due to economic pressure that affected consumer spending and payment capacity.
Behind the Headlines
Revenues decreased 1.4% year over year to $939 million, attributable to reduced merchant discount fees resulting from lower big-ticket credit sales. The top line, however, beat the consensus estimate by 2.2%.
Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise
Bread Financial Holdings, Inc. price-consensus-eps-surprise-chart | Bread Financial Holdings, Inc. Quote
Credit sales of $6 billion decreased 7% year over year, reflecting moderating consumer spending and strategic credit tightening, partially offset by new partner growth. Our estimate for the metric was pegged at $6.3 billion.
The average loan amount was $17.9 billion, an increase of 1% year over year, driven by ongoing growth in co-brand programs. Our estimate for the same was $17.6 billion.
Total interest income decreased 38.5% to $1.2 billion, in line with our estimate and the Zacks Consensus Estimate.
Net interest margin contracted 70 basis points to 18%. The Zacks Consensus Estimate and our estimate for the metric were 18% and 19.4%, respectively.
Total non-interest expenses decreased 11.5% to $469 million, primarily attributable to a decrease in employee compensation and benefits, card and processing expenses and employee compensation and benefit costs, as well as marketing expenses. Our estimate for the same was pegged at $507.2 million.
The delinquency rate of 6% deteriorated 50 basis points year over year. The net loss rate of 8.6% deteriorated 60 basis points.
Pre-tax pre-provision earnings increased 11.4% year over year to $420 million. Our estimate for the same was $418 million.
Financial Update
As of Jun 30, 2024, cash and cash equivalents were $4.1 billion, up 12.9% from the 2023 level.
In second-quarter 2024, long-term debt and other debt declined 7% from the 2023-end level to $1.3 billion.
Tangible book value was $48.89 per share as of Jun 30, 2024, up 25% year over year.
Return on average equity was 16.7%, which expanded 730 basis points year over year.
Cash from operations for the first half of 2024 increased 24.7% year over year to $924 billion.
Capital Deployment
The board also approved a quarterly dividend of 21 cents to be paid out on Sep 13 to stockholders of record as of Aug 9. The company bought back shares worth $11 million.
2024 Guidance
Management estimates average receivables to decline in the low single-digit range from the 2023 level. It expects 2024 average credit card and other loans to be down in low single digits from the 2023 level.
Total revenues are estimated to decline in low-to-mid single digits.
Total non-interest expenses are estimated to decline in low mid-single digits.
The net loss rate is guided in the low 8% 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.
Upcoming Releases
The Western Union Company (WU - Free Report) will report second-quarter 2024 results on Jul 30. The Zacks Consensus Estimate for second-quarter earnings is pegged at 44 cents per share, indicating a decrease of 13.7% from the year-ago quarter’s reported figure.
WU’s earnings beat estimates in each of the trailing four quarters.
Mastercard Incorporated (MA - Free Report) will report second-quarter 2024 results on Jul 31. The Zacks Consensus Estimate for second-quarter earnings is pegged at $3.51 per share, indicating an increase of 21.5% from the year-ago quarter’s reported figure.
MA’s earnings beat estimates in each of the trailing four quarters.
Global Payments (GPN - Free Report) will report second-quarter 2024 results on Aug 7. The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.91 per share, indicating an increase of 11.1% from the year-ago quarter’s reported figure.
GPN’s earnings beat estimates in each of the trailing four quarters.