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On Monday, Citizens JMP analysts maintained a Market Perform rating on shares of Bread Financial Holdings (NYSE:BFH), following a review of the company’s recent earnings and growth prospects. According to InvestingPro data, the company appears slightly undervalued based on its Fair Value analysis. The analysts provided an update to their model and offered additional insights into Bread Financial’s future performance and capital management strategies.
Bread Financial’s stock experienced a modest rise of approximately 2.1% since the company announced its first-quarter results last Thursday. This increase came amidst a broader market uptick, with the S&P 500 climbing roughly 2.8% during the same period. The company reported stronger-than-expected earnings for the first quarter of 2025 but expressed caution regarding near-term growth due to uncertainties in the macroeconomic environment, particularly potential inflationary pressures from tariffs.
Management at Bread Financial highlighted their improved ability to return capital to shareholders, citing enhanced capital ratios and substantial balance sheet progress. InvestingPro analysis reveals that management has been aggressively buying back shares, and the company has maintained dividend payments for 10 consecutive years. The company suggested that stock repurchases might increase following decisive capital actions that have been taken since March. Get access to 6 more exclusive InvestingPro Tips and comprehensive financial analysis with an InvestingPro subscription.
Despite these positive developments, Citizens JMP analysts pointed out that Bread Financial faces ongoing competitive challenges, especially from Buy Now, Pay Later (BNPL) services. Additionally, there is uncertainty surrounding net interest margin (NIM) due to a shift toward co-branded card offerings. The analysts concluded that Bread Financial’s stock is currently trading at a valuation that appears fair, with a P/E ratio of 8.6x and price-to-book ratio of 0.77x, approximately 6 times their normalized 2026 earnings per share estimate, which does not account for the potential benefits from mitigating actions next year, and around 1.0 times tangible book value.
In other recent news, Bread Financial Holdings Inc reported impressive financial results for the first quarter of 2025, exceeding Wall Street’s forecasts. The company achieved an earnings per share of $2.86, significantly outperforming the expected $2.28, which marked a surprise of 25.4%. Revenue also surpassed predictions, reaching $970 million compared to the anticipated $957.48 million. Additionally, Bread Financial’s net income for the quarter was $138 million, with credit sales increasing by 1% year-over-year to $6.1 billion. Despite a 2% decline in average loans, the company maintained its competitive edge through strategic partnerships and innovations. Notably, Bread Financial announced a new card program with crypto.com, further diversifying its portfolio. The firm also completed a $400 million subordinated notes offering and a $150 million share repurchase program, reflecting its disciplined approach to capital allocation. These recent developments underscore Bread Financial’s strong market position and strategic growth initiatives amidst a challenging economic environment.
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