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Bread Financial Holdings (BFH)
NYSE:BFH
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Bread Financial Holdings
(NYSE:BFH)
63Neutral
Positive Factors
Card Spend Growth
Card spend growth inflected positive for the first time in about two years to +1.2% year over year.
Credit Performance
Credit is trending in the right direction and trading below 7x 2026e EPS, view valuation as undemanding.
Negative Factors
Revenue Guidance
BFH missed 4Q top-line estimates and is only guiding for low-single-digit revenue growth in 2025.
Bread Financial Holdings (BFH) vs. S&P 500 (SPY)
Market Cap
$2.34B
Dividend Yield1.81%
Average Volume (3M)894.93K
Price to Earnings (P/E)8.5
Beta (1Y)1.62
Revenue Growth-3.06%
EPS Growth-61.20%
CountryUS
Employees6,000
SectorFinancial
Sector Strength77
IndustryCredit Finance
Share Statistics
EPS (TTM)5.52
Shares Outstanding49,092,358
10 Day Avg. Volume1,250,179
30 Day Avg. Volume894,933
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.54
Price to Cash Flow (P/CF)1.20
P/FCF Ratio1.20
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$71.11Price Target Upside49.14% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering12
Bread Financial Holdings Business Overview & Revenue Model
Company DescriptionAlliance Data Systems Corp. engages in the provision of data-driven and transaction-based marketing and customer loyalty solutions. It operates through the following segments: LoyaltyOne, Epsilon and Card Services. The LoyaltyOne segment provides coalition and short-term loyalty programs. The Epsilon segment offers end-to-end, integrated marketing solutions. The Card Services offers risk management solutions, account origination, funding, transaction processing, customer care, collections, and marketing services for the company's private label and co-brand credit card programs. The company was founded in 1996 and is headquartered in Columbus, Ohio.
How the Company Makes MoneyBread Financial Holdings makes money primarily through its credit card services, which include private label and co-branded credit card offerings. These services generate revenue through interest income on outstanding credit card balances and fees collected from cardholders, such as annual fees, late payment fees, and transaction fees. Additionally, the company earns merchant fees from retailers who accept their credit cards, and through its BNPL solutions, Bread Financial generates revenue from merchant fees and interest on installment loans. Partnerships with major retailers and financial institutions play a significant role in expanding their customer base and enhancing their revenue streams. Bread Financial also generates income through its savings products, earning interest on customer deposits and providing financial solutions to individuals and businesses.
Bread Financial Holdings Financial Statement Overview
Summary
Bread Financial Holdings displays a strong recovery in revenue and operational efficiency, supported by significant debt reduction, enhancing financial stability. Declining net income poses a concern, impacting profitability margins. The company's strong cash flow generation continues to support its financial health, positioning it well for future growth despite some profitability challenges.Income Statement
Bread Financial Holdings shows a positive revenue trend with revenue growing from $3.06 billion in 2023 to $5.02 billion in 2024, marking a significant rebound. The gross profit and EBIT margins are strong, indicating efficient operations. However, net income has decreased from $718 million in 2023 to $277 million in 2024, which impacts net profit margin adversely. EBIT margin remains solid at 5.55%, but net profit margin drops to 5.51% from 23.46% in 2023, suggesting declining profitability.72
Positive
Balance Sheet
The company has improved its financial stability by reducing total debt from $5.44 billion in 2023 to zero in 2024, significantly improving the debt-to-equity ratio. Stockholders' equity has increased, reflecting a stronger equity position. However, equity ratio is low at 13.33% in 2024, and total assets have slightly decreased. The absence of debt is commendable and mitigates financial risk.65
Positive
Cash Flow
Operating cash flow remains robust at $1.86 billion in 2024, with a slight decline from $1.99 billion in 2023. Free cash flow remains strong, supporting the company's liquidity. The company's ability to generate cash from operations is a positive indicator, with free cash flow to net income ratio at 6.71, highlighting a strong cash generation relative to net income.80
Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.02B | 5.02B | 3.06B | 3.87B | 3.27B | 4.52B | Gross Profit |
| 2.60B | 5.02B | 3.06B | 3.87B | 1.68B | 1.84B | EBIT |
| 865.00M | 279.00M | 1.59B | 802.00M | 1.04B | 394.50M | EBITDA |
| 750.50M | 1.43B | 0.00 | 0.00 | 1.14B | 407.00M | Net Income Common Stockholders |
| 463.30M | 277.00M | 718.00M | 223.00M | 801.00M | 295.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 3.68B | 3.68B | 3.59B | 3.99B | 3.11B | 3.08B | Total Assets |
| 22.89B | 22.89B | 23.14B | 25.41B | 21.75B | 22.55B | Total Debt |
| 5.68B | 5.68B | 5.44B | 8.13B | 7.57B | 8.82B | Net Debt |
| 2.01B | 2.01B | 1.85B | 4.24B | 4.53B | 5.73B | Total Liabilities |
| 19.84B | 19.84B | 20.22B | 23.14B | 19.66B | 21.03B | Stockholders Equity |
| 3.05B | 3.05B | 2.92B | 2.27B | 2.09B | 1.52B |
| Cash Flow | Free Cash Flow | ||||
| 1.46B | 1.86B | 1.99B | 1.78B | 1.46B | 1.83B | Operating Cash Flow |
| 1.55B | 1.86B | 1.99B | 1.85B | 1.54B | 1.88B | Investing Cash Flow |
| -3.12B | -1.17B | 788.00M | -5.11B | -1.69B | 1.77B | Financing Cash Flow |
| 1.90B | -592.00M | -3.09B | 3.27B | 608.00M | -4.17B |
Bread Financial Holdings Technical Analysis
Negative
47.68
Price Trends
59.04
Negative
58.24
Negative
53.03
Negative
Market Momentum
-3.52
Positive
25.10
Positive
21.91
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BFH, the sentiment is Negative. The current price of 47.68 is below the 20-day moving average (MA) of 55.16, below the 50-day MA of 59.04, and below the 200-day MA of 53.03, indicating a bearish trend. The MACD of -3.52 indicates Positive momentum. The RSI at 25.10 is Positive, neither overbought nor oversold. The STOCH value of 21.91 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BFH.
Bread Financial Holdings Risk Analysis
Bread Financial Holdings disclosed 63 risk factors in its most recent earnings report. Bread Financial Holdings reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Bread Financial Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $20.33B | 6.40 | 22.96% | 1.91% | 19.73% | 65.57% | |
74 Outperform | $39.50B | 9.46 | 24.68% | 1.78% | 15.25% | 45.76% | |
72 Outperform | $63.07B | 14.14 | 7.86% | 1.46% | 9.06% | -3.02% | |
71 Outperform | $179.42B | 18.64 | 34.47% | 1.07% | 10.12% | 24.93% | |
64 Neutral | $13.80B | 10.64 | 9.23% | 4.22% | 17.66% | -7.66% | |
63 Neutral | $2.34B | 8.46 | 9.31% | 1.81% | -3.06% | -61.20% | |
60 Neutral | $10.29B | 19.26 | 6.63% | 3.58% | 3.41% | -12.41% |
* Financial Sector Average
Performance Comparison
BFH
Bread Financial Holdings
47.68
9.89
26.17%
AXP
American Express
255.39
35.02
15.89%
COF
Capital One Financial
165.40
26.87
19.40%
DFS
Discover Financial Services
157.77
34.11
27.58%
ALLY
Ally Financial
33.45
-3.77
-10.13%
SYF
Synchrony Financial
51.99
9.34
21.90%
Bread Financial Holdings Earnings Call Summary
Earnings Call Date: Jan 30, 2025 | % Change Since: -24.83% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted the addition of significant brand partners and strong partner growth, as well as improvements in capital levels and operating leverage. However, it also revealed challenges such as decreased credit sales and loans, a decline in revenue, concerns over net loss rates, and lower net interest income.Highlights
Addition of Iconic Brand Partners
Bread Financial added iconic partners like Hard Rock International, HP, and Saks Fifth Avenue, along with seven renewals in 2024, securing more than 85% of loans through 2026 and nine out of the top 10 programs through at least 2028.
Improved Capital Levels
Bread Financial improved capital levels, reduced parent-level debt by 50%, and achieved a double leverage ratio target of below 115%. Tangible book value per share increased 7% year-over-year.
Positive Operating Leverage
Due to expense discipline and efficiency gains, Bread Financial delivered on its positive operating leverage goal with lower expenses than originally forecasted for 2024.
Strong Partner Growth
Year-over-year positive fourth-quarter credit sales growth in categories such as beauty, sporting goods, and retail apparel, with improvement in millennial and Gen Z sales.
Lowlights
Decreased Credit Sales and Loans
Credit sales of $27 billion decreased 7% and average loans of $18.1 billion decreased 1% for the full year, reflecting moderated consumer spending and proactive credit tightening actions.
Revenue Decline
Revenue of $3.8 billion decreased by $451 million or 11% due to lower finance charges, late fees, and merchant discount fees, as well as a $230 million gain on sale in the comparative 2023 period.
Net Loss Rate Concerns
The fourth-quarter net loss rate was 8.0%, with expectations of a net loss rate in the 8.0% to 8.2% range for 2025, which remains above the company's long-term target.
Lower Net Interest Income
Total net interest income for the quarter decreased by 8% year-over-year due to a lower loan yield and reduced merchant discount fees.
Company Guidance
During Bread Financial's Q4 2024 earnings call, the company provided various financial metrics as part of its guidance. For the year 2024, Bread Financial reported credit sales of $27 billion, a decrease of 7%, and average loans of $18.1 billion, a decrease of 1%. Revenue stood at $3.8 billion, down by 11% from 2023. The company achieved an adjusted diluted EPS of $7.60 for the full year. In Q4, Bread Financial repurchased $44 million in convertible notes and $44 million of common shares, ending the quarter with $7.7 billion in direct-to-consumer deposits. The tangible book value per share increased by 7% year-over-year to $46.97, and the CET1 capital ratio rose 20 basis points to 12.4%. Looking ahead to 2025, the company anticipates flat average loans but a slight increase in year-end loans, with total revenue growth projected to be up in the low single digits. They expect a net loss rate between 8.0% to 8.2% and plan for a normalized effective tax rate of 25% to 26%. The company remains focused on operational excellence and technology advancements to maintain positive operating leverage, despite macroeconomic uncertainties.Bread Financial Holdings Corporate Events
Private Placements and FinancingStock BuybackBusiness Operations and Strategy
Bread Financial Holdings Announces Share Repurchase Program
Positive
Mar 5, 2025
On March 5, 2025, Bread Financial Holdings announced a new share repurchase program authorized by its Board of Directors to buy back up to $150 million of its common stock, with no expiration date. Additionally, the company announced a private offering of fixed-rate reset subordinated notes, intending to lend at least $250 million of the net proceeds to Comenity Capital Bank and use the remaining for general corporate purposes. These initiatives aim to strengthen Bread Financial’s capital ratios and provide flexibility for future growth, impacting its market positioning and stakeholder interests.
Financial Disclosures
Bread Financial Holdings Reports Improved Financial Metrics
Positive
Feb 11, 2025
In a performance update for January 2025, Bread Financial Holdings reported a decrease in its net loss rate to 7.8% from 8.0% in January 2024, and a decline in its delinquency rate to 6.1% from 6.8%. The company’s end-of-period credit card and other loans also decreased to $18,366 million from $18,785 million the previous year. These changes highlight a positive trend in the company’s financial health, suggesting improved credit performance and financial stability, which may strengthen its position in the competitive financial services market.
DividendsBusiness Operations and StrategyFinancial Disclosures
Bread Financial Reports Q4 2024 Results and Strategic Progress
Positive
Jan 30, 2025
On January 30, 2025, Bread Financial announced its Q4 2024 financial results, revealing strategic progress in capital flexibility, debt reduction, and shareholder returns. The company declared a quarterly dividend and reported growth in credit sales, despite economic uncertainties. With improved rating outlooks and secured loan programs extending through 2028, Bread Financial is cautiously optimistic for 2025. It continues to focus on disciplined capital allocation, operational excellence, and managing regulatory challenges, including the CFPB late fee rule.
Financial Disclosures
Bread Financial Reports Net Loss Amid Delinquency Decline
Negative
Jan 30, 2025
On January 30, 2025, Bread Financial Holdings, Inc. released a performance update for the period ending December 31, 2024. The update highlighted a net loss rate of 8.0% to 8.1% and a decrease in delinquency rate from 6.5% in 2023 to 5.9% in 2024. A freeze on delinquency progression due to hurricanes Helene and Milton affected the fourth quarter results, with implications for increased net losses expected in the second quarter of 2025.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.