Bread Financial Holdings (BFH) AI Stock Analysis

• Market Cap: $2.06B
• Dividend Yield: 2%
• Average Volume (3M): 1.09M
• Price to Earnings (P/E): 7.6
• Beta (1Y): 1.57
• Revenue Growth: -3.06%
• EPS Growth: -61.20%
• Country: US
• Employees: 6,000
• Sector: Financial
• Sector Strength: 80
• Industry: Financial - Credit Services
• EPS (TTM): 5.52
• Shares Outstanding: 49,092,358
• 10 Day Avg. Volume: 1,019,529
• 30 Day Avg. Volume: 1,091,151
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.58
• Price to Cash Flow (P/CF): 1.30
• P/FCF Ratio: 1.30
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $69.56
• Price Target Upside: 66.09% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

Bread Financial Holdings demonstrates strong financial stability and cash flow, with operational efficiency and debt reduction. However, declining profitability and negative technical indicators are major concerns. Valuation appears attractive, but the earnings call and corporate events suggest mixed signals with some positive developments offset by revenue and credit challenges.

Positive Factors

Credit Performance

Credit trajectory looking better versus just 3 months ago, with 4Q24 delinquencies down 56 basis points year over year.

Valuation

Currently trading at less than 8 times estimated 2026 EPS, shares are viewed as attractive, and a Buy rating is reiterated.

Negative Factors

Net Interest Margin

NIM was below expectations at 17.8% vs 18.5% forecast which drove lower top-line results.

Revenue Outlook

BFH missed 4Q top-line estimates and is only guiding for low-single-digit revenue growth in 2025.

Bread Financial Holdings Business Overview & Revenue Model

Company Description

Bread Financial Holdings, Inc. provides tech-forward payment and lending solutions to customers and consumer-based industries in North America. It offers credit card and other loans financing services, including risk management solutions, account origination, and funding services for approximately 130 private label and co-brand credit card programs, as well as through Bread partnerships to approximately 500 small-and medium-sized businesses merchants; and Comenity-branded general purpose cash-back credit. The company also manages and services the loans it originates for private label, co-brand, and general-purpose credit card programs and Bread BNPL (installment loans, split-pay) products; and provides marketing, and data and analytics services. In addition, it offers an enhanced digital suite that includes a unified software development kit, which provides access to its suite of products, as well as promotes credit payment options earlier in the shopping experience. Further, the company through Bread, a digital payments platform and robust suite of application programming interfaces allows merchants and partners to integrate online point-of-sale financing and other digital payment products, including installment and split-pay solutions. The company was formerly known as Alliance Data Systems Corporation and changed its name to Bread Financial Holdings, Inc. in March 2022. Bread Financial Holdings, Inc. was founded in 1996 and is headquartered in Columbus, Ohio.

How the Company Makes Money

Bread 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 shows a positive revenue trend with a significant rebound, strong gross profit, and EBIT margins indicating efficient operations. However, declining net income and net profit margins are concerns, despite strong cash flow generation and debt reduction enhancing financial stability.

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.

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.

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.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.02B	3.06B	3.87B	3.27B	4.52B
	Gross Profit
5.02B	3.06B	3.87B	1.68B	1.84B
	EBIT
279.00M	1.59B	802.00M	1.04B	394.50M
	EBITDA
1.43B	0.00	0.00	1.14B	407.00M
	Net Income Common Stockholders
277.00M	718.00M	223.00M	801.00M	295.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
3.68B	3.59B	3.99B	3.11B	3.08B
	Total Assets
22.89B	23.14B	25.41B	21.75B	22.55B
	Total Debt
5.68B	5.44B	8.13B	7.57B	8.82B
	Net Debt
2.01B	1.85B	4.24B	4.53B	5.73B
	Total Liabilities
19.84B	20.22B	23.14B	19.66B	21.03B
	Stockholders Equity
3.05B	2.92B	2.27B	2.09B	1.52B
Cash Flow		Free Cash Flow
1.86B	1.99B	1.78B	1.46B	1.83B
	Operating Cash Flow
1.86B	1.99B	1.85B	1.54B	1.88B
	Investing Cash Flow
-1.17B	788.00M	-5.11B	-1.69B	1.77B
	Financing Cash Flow
-592.00M	-3.09B	3.27B	608.00M	-4.17B

Bread Financial Holdings Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 41.88
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: 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 41.88 is below the 20-day moving average (MA) of 48.99, below the 50-day MA of 54.78, and below the 200-day MA of 53.83, indicating a bearish trend. The MACD of -1.21 indicates Negative momentum. The RSI at 42.87 is Neutral, neither overbought nor oversold. The STOCH value of 45.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BFH.

Bread Financial Holdings Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DFS	77 Outperform	$37.00B	8.30	24.68%	1.90%	15.46%	45.83%
AXP	71 Outperform	$163.84B	16.67	34.47%	1.20%	10.12%	24.93%
ALLY	69 Neutral	$9.87B	17.85	6.63%	3.74%	3.41%	-12.41%
COF	67 Neutral	$57.66B	12.99	7.86%	1.59%	9.06%	-3.02%
SYF	65 Neutral	$17.03B	5.12	22.96%	2.28%	19.73%	65.57%
Sector *	63 Neutral	$12.86B	9.19	9.16%	4.78%	16.31%	-8.97%
BFH	63 Neutral	$2.06B	7.62	9.31%	2.00%	-3.06%	-61.20%

Bread Financial Holdings Corporate Events

Bread Financial Reports Improved Credit Performance

On March 17, 2025, Bread Financial Holdings, Inc. released a performance update for the period ending February 28, 2025, highlighting a decrease in both net loss and delinquency rates compared to the previous year. The net loss rate improved to 8.6% from 8.9%, and the delinquency rate decreased to 6.2% from 6.7%, indicating a positive trend in credit performance, which may impact the company’s market positioning positively.

Bread Financial Holdings Announces Share Repurchase Program

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.

Bread Financial Holdings Reports Improved Financial Metrics

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.

Bread Financial Reports Q4 2024 Results and Strategic Progress

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.

Bread Financial Reports Net Loss Amid Delinquency Decline

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.