Reasons Why Investors Should Retain Bread Financial (BFH)
Bread Financial Holdings, Inc. BFH has been in investors’ good books owing to solid consumer spending, credit sales performance, strategic investments and a robust capital position.
Growth Projections
The Zacks Consensus Estimate for BFH’s 2023 earnings is pegged at $11.71, indicating a 161.9% increase from the year-ago reported figure, driven by 11.3% higher revenues of $4.26 billion.
Northbound Estimate Revision
The Zacks Consensus Estimate for Bread Financial’s 2023 earnings has moved 2.5% north in the past seven days. This should instill investors' confidence in the stock.
Zacks Rank
Bread Financial currently carries a Zacks Rank #3 (Hold).
Business Tailwinds
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 should continue to invest in its digital platform, product innovation, marketing efforts and technology modernization. BFH intends to make incremental strategic investments of more than $125 million in technology modernization, digital advancement, marketing and product innovation to fuel growth opportunities and future operating efficiencies.
Capital ratios are likely to improve on the back of a 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. 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.
Price Performance
In the past year, the stock has decreased 30.1% against the industry’s increase of 5.7%. Strong fundamentals of Bread Financial are likely to help the stock bounce back.
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Stocks to Consider
Some better-ranked financial transaction service providers are Paysafe Limited PSFE, Green Dot Corporation GDOT and Usio Inc USIO, each carrying Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Paysafe’s earnings surpassed estimates in three of the last four quarters and missed in one, the average being 190.54%. In the past year, PSFE has lost 60.8%.
The Zacks Consensus Estimate for PSFE’s 2023 and 2024 earnings has moved 243% and 58.6% north, respectively, in the past 30 days.
Green Dot has a decent track record of beating earnings estimates in each of the last four reported quarters, the average beat being 37.34%. In the past year, GDOT has lost 21.4%.
The Zacks Consensus Estimate for GDOT’s 2024 EPS indicates a year-over-year increase of 19.5%.
The Zacks Consensus Estimate for Usio’s 2023 and 2024 EPS indicates a year-over-year increase of 140.74% and 118.1%, respectively. In the past year, USIO has lost 13.4%.
The Zacks Consensus Estimate for USIO’s 2023 and 2024 revenues indicates a year-over-year increase of 19.1% and 12%, respectively.
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Green Dot Corporation (GDOT) : Free Stock Analysis Report
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Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report
