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Bread Financial Holdings Inc BFH

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Credit Costs Have Been a Headwind for Bread, but Credit Trends Point to Stabilization

Michael Miller

High revenue concentration in Bread’s retail credit card business means the bank faces the persistent risk of losing major partners, with Wayfair and Meijer going to Citi in 2020 and BJ's Wholesale Club to Capital One in 2022. We see retail partner loss as an ongoing threat to Bread, as the firm lacks a competitive advantage that would give it an edge in retaining partnerships during contract renewal negotiations.

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Price vs Fair Value

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BFH is trading at a LOCK|gwf$$Kk premium.
Price
$96.94
Fair Value
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Uncertainty
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1-Star Price
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5-Star Price
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Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Bread’s buy now, pay later offering could gain momentum as consumer adoption of the financing option increases.

Bears

Bread's portfolio has materially higher credit costs than its peers, if economic conditions deteriorate we expect the firm to be harder hit.

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Trading Information

Previous Close Price
—
Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Shares Outstanding
38.42M
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
7.45
Price/Sales
1.09
Dividend Yield (Trailing)
0.95%
Dividend Yield (Forward)
0.95%
Dividend Payment Schedule
Mar, Jun, Sep, Dec
Total Yield
15.96%

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, which partners with retailers to jointly market Bread’s credit cards to their customers. The company also retains a minority interest in spun-off LoyaltyOne, 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
6,000
Website
https://www.breadfinancial.com

Competitors

Valuation

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Metric
BFH
SYF
Price/Earnings (Normalized)
 7.457.33
Price/Book Value
 1.111.53
Price/Sales
 1.091.67
Price/Cash Flow
 1.962.51
Price/Earnings
BFH
SYF

Financial Strength

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

Profitability

Metric
BFH
SYF
Return on Assets (Normalized)
 3.01%2.93%
Return on Equity (Normalized)
 20.25%22.68%
Return on Invested Capital (Normalized)
 ——
Return on Assets
BFH
SYF

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