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Bread Financial Holdings Inc BFH

Morningstar Rating
$41.88 +0.72 (1.75%)
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Company Report

Portfolio and Deposit Structure Leave Some Consumer Banks With Limited Exposure to Lower Rates

After two years of rapid interest rate hikes, the rising rate cycle is likely over. While there is still considerable uncertainty surrounding the path that interest rates will take from here, the market is now anticipating falling interest rates in 2024, with interest rate futures projecting one to three rate cuts in 2024 and even more the following year. Like their traditional banking peers, many of the consumer finance-focused banks in our coverage did benefit from rising interest rates. However, this benefit was not uniform; there were clear winners and losers. We expect a similar phenomenon in a period of falling interest rates, with different firms holding significantly different exposure to interest rate movements.

Price vs Fair Value

BFH is trading within a range we consider fairly valued.
Price
$41.88
Fair Value
$14.00
Uncertainty
Very High
1-Star Price
$61.00
5-Star Price
$49.00
Economic Moat
Nnhf
Capital Allocation
Wmwts

Bulls Say, Bears Say

Bulls

Bread Financial’s restructuring efforts have been highly successful in reducing the company’s costs. This has allowed it to adjust effectively for its smaller size and retain profitability.

Bears

Bread's portfolio has materially higher credit costs than its peers, placing the firm at risk as economic conditions deteriorate.

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News

Trading Information

Previous Close Price
$41.16
Day Range
$41.3441.95
52-Week Range
$26.0842.73
Bid/Ask
$41.29 / $42.49
Market Cap
$2.08 Bil
Volume/Avg
362,041 / 850,043

Key Statistics

Price/Earnings (Normalized)
4.58
Price/Sales
0.52
Dividend Yield (Trailing)
2.04%
Dividend Yield (Forward)
2.04%
Total Yield
3.69%

Company Profile

Formed by a combination of JCPenney’s credit card processing unit and The Limited’s credit card bank business, Bread Financial is a provider of private label and co-branded credit cards, loyalty programs, and marketing services. The company’s most financially significant unit is its credit card business that partners with retailers to jointly market Bread’s credit cards to their customers. The company also retains minority interest in its recently spun-off LoyaltyOne division, which operates the largest airline miles loyalty program in Canada and offers marketing services to grocery chains in Europe and Asia.
Sector
Financial Services
Industry
Credit Services
Stock Style Box
Small Value
Total Number of Employees
7,000

Competitors

Valuation

Metric
BFH
SYF
DFS
Price/Earnings (Normalized)
4.588.5510.86
Price/Book Value
0.681.222.25
Price/Sales
0.521.171.89
Price/Cash Flow
1.031.923.82
Price/Earnings
BFH
SYF
DFS

Financial Strength

Metric
BFH
SYF
DFS
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
BFH
SYF
DFS

Profitability

Metric
BFH
SYF
DFS
Return on Assets (Normalized)
3.39%2.61%1.60%
Return on Equity (Normalized)
28.54%22.66%17.20%
Return on Invested Capital (Normalized)
Return on Assets
BFH
SYF
DFS
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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
V
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MA
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COF
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DFS
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SYF
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ALLY
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SOFI
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WU
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