Bread Financial (BFH) Q4 Earnings Beat, Credit Sales Up Y/Y
Bread Financial Holdings’ BFH operating loss of $2.68 per share for the fourth quarter of 2022 was narrower than the Zacks Consensus Estimate of a loss of $3.67 and our estimate of $4.06. The bottom line compared unfavorably with $1.21 per share earned in the year-ago quarter.
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 20.5% year over year to $1 billion, resulting from higher average loan balances and improved loan yields. The top line beat the consensus estimate by 5.2% but surpassed our estimate of $935 million.
Credit sales increased 16% to $10.2 billion, driven by new brand partner additions as well as new products and growth from existing brand partners. Average receivables of $19.8 billion were up 23% year over year.
Total interest income increased 30% to $1.3 billion and beat our estimate of $1.2 billion. The net interest margin expanded 30 basis points to 19.1%.
Total non-interest expenses increased 28% to $548 million, primarily attributable to an increase in compensation and benefit expense and information processing and communication expenses. Our estimate was $752 million.
The delinquency rate of 5.5% deteriorated 160 basis points year over year, while the net loss rate of 5% deteriorated 190 basis points from the year-ago period.
Pre-tax pre-provision earnings increased 13% year over year to $485 million, reflecting profitable growth and continued success with business transformation efforts. Our estimate was $183.1 million.
Operating income of $4.47 per share beat the Zacks Consensus Estimate of $3.36 and our estimate of $3.09. The bottom line declined 72% year over year.
Revenues increased 17% year over year to $3.8 billion. The top line was almost in line with the consensus estimate but surpassed our estimate of $3.7 billion.
Average receivables of $17.8 billion were up 13% year over year.
As of Dec 31, 2022, cash and cash equivalents were $3.8 billion, up 27.7% from the 2021 level.
At 2022-end, the long-term debt and other debt level was down 4.7% from 2021-end to $1.9 billion.
Tangible book value of $29.42 per share as of Dec 31, 2022 improved 4.7% over 2021 end.
Cash from operations increased 19.8% year over year to $1.8 billion in 2022. Capital expenditure at Bread Financial decreased 19% year over year to $68 million in the same period.
The board of directors approved a quarterly dividend of 21 cents to be paid out on Mar 17 to stockholders of record as of Feb 10.
Management estimates average receivables growth in the mid-single-digit range from the 2022 level.
Total revenue growth is expected to be closely aligned with average loan growth. Net interest margin is expected to remain similar to 2022.
Total non-interest expenses are expected to reflect positive operating leverage.
Total expenses will increase given the ongoing investment in technology modernization, digital advancement, marketing, and product innovation, along with strong portfolio growth.
The net loss rate is guided at about 7%.
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 reported fourth-quarter 2022 adjusted earnings of $2.65 per share, which outpaced the Zacks Consensus Estimate and our estimate of $2.56. The bottom line advanced 13% year over year. Mastercard’s revenues amounted to $5,817 million, which rose 12% year over year in the quarter under review. The top line beat the consensus mark of $5,766 million and our estimate of $5,792.6 million.
GDV (representing the aggregated dollar amount of purchases made and cash disbursements obtained from MasterCard-branded cards) improved 8% year over year on a local-currency basis to $2,133 billion. Cross-border volumes (a key measure that tracks spending on cards beyond the issuing country) improved 31% 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 34 billion. The metric rose 8% year over year.
Visa Inc. V reported fiscal first-quarter 2023 earnings of $2.18 per share, which beat the Zacks Consensus Estimate of $2.01 by 8.5%. The bottom line improved 21% year over year. Net revenues amounted to $7.9 billion, which advanced 12% year over year in the quarter under review. The top line outpaced the consensus mark by 3.4%.
Visa’s payments volume grew 7% year over year on a constant-dollar basis in the December quarter. Processed transactions (implying transactions processed by Visa) totaled 52.5 billion, which rose 10% year over year.
Global Payments GPN is set to report fourth-quarter 2022 results on Feb 9. The Zacks Consensus Estimate for the fourth quarter is pegged at $2.45, indicating an increase of 15% from the year-ago reported figure.
Global Payments delivered an earnings surprise in two of the last four quarters, missed in one and met estimates in one.
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