Bread Financial Holdings’ BFH operating income of 41 cents per share for the fourth quarter of 2024 beat the Zacks Consensus Estimate of 33 cents. Shares gained 0.1% in the last trading session to reflect the overperformance. 

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The bottom line plunged 54% year over year. The quarterly results reflected a dip in revenues but higher credit sales.

Behind the Headlines of BFH

Revenues decreased 9.2% year over year to $926 million, primarily due to lower finance charges and late fees resulting from a lower average prime rate and gradual shift in risk and product mix. This led to a lower proportion of private label accounts as well as reduced merchant discount fees due to lower big ticket credit sales. The top line missed the consensus estimate by 3.3%.

Credit sales of $7.9 billion increased 1%, indicating new partner growth and stronger holiday sales.

Bread Financial Holdings, Inc. Price, Consensus and EPS Surprise

Bread Financial Holdings, Inc. price-consensus-eps-surprise-chart | Bread Financial Holdings, Inc. Quote

Average loans of $18.2 billion decreased 1%, due to lower full year credit sales and elevated gross losses. Our estimate for the same was $17.9 billion.

Total interest income decreased 7.1% to $1.2 billion, in line with our estimate and the Zacks Consensus Estimate.

Net interest margin contracted 180 basis points to 17.8%. The Zacks Consensus Estimate for the metric was 18.5%.

Total non-interest expenses increased 3.9% to $536 million, primarily caused by an increase in employee compensation and benefits costs due to repurchased convertible notes. 

The delinquency rate of 5.9% deteriorated 60 basis points year over year. The net loss rate of 8% remained flat year over year.

Pre-tax pre-provision earnings decreased 22.1% year over year to $390 million, due to lower net interest income and higher employee compensation and benefits costs.

BFH’s Financial Update

As of Dec. 30, 2024, cash and cash equivalents were $3.7 billion, up 2.5% from the  level of 2023.

At 2024-end, long-term debt and other debt declined 28.3% from the 2023-end level to nearly $1 billion.

Tangible book value was $46.97 per share as of Dec. 30, 2024, up 7% year over year.

Return on average equity was 8.7% in 2024. The figure contracted 1840 basis points year over year. 

Cash from operations in 2024 decreased 6% year over year to $1.9 billion.

Capital Deployment of BFH

BFH’s board also approved a quarterly dividend of 21 cents to be paid out on March 21 to its stockholders of record as of Feb. 14, 2025. The company bought back shares worth $44 million.

BFH’s 2025 Guidance

Management estimates average receivables to remain flat with 2024 level. It expects average credit card and other loans to be flat with 2024 level.

Total revenues are estimated to be up low single digits. 

The net loss rate is guided in the range of 8-8.2%.

BFH’s Zacks Rank

Bread Financial currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Release

American Express Company AXP reported fourth-quarter 2024 earnings per share (EPS) of $3.04, which beat the Zacks Consensus Estimate by a whisker. The bottom line climbed 16% year over year.

Network volumes of $464 billion rose 7% year over year in the fourth quarter, driven by higher consumer spending. The figure surpassed the Zacks Consensus Estimate of $458.7 billion. Total interest income of $6.1 billion increased 9% year over year but missed the consensus mark of $6.2 billion.

AXP anticipates revenues to increase between 8% and 10% in 2025 from the 2024 level of $65.9 billion. Management expects EPS in the range of $15-$15.5, the midpoint of which indicates an improvement of 8.9% from the 2023 level of $14.01.
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Virtu Financial, Inc. VIRT reported fourth-quarter 2024 adjusted EPS of $1.14, which outpaced the Zacks Consensus Estimate by 32.6%. The bottom line jumped more than four-fold year over year. Adjusted net trading income improved more than 75% year over year to $457.7 million in the quarter under review. The figure beat the consensus estimate by 14.7%.

Adjusted EBITDA jumped to $283.5 million in the quarter under review from $99 million a year ago and surpassed our model estimate of $175.8 million. Adjusted EBITDA margin of 57.5% improved 2,400 basis points year over year.

Synchrony Financial SYF reported fourth-quarter 2024 adjusted EPS of $1.91, which beat the Zacks Consensus Estimate of $1.90. The bottom line also increased from $1.03 a year ago. Net interest income improved 2.7% year over year to $4.6 billion in the fourth quarter. However, it missed the consensus mark by a whisker.

Total deposits were $82.1 billion, which rose 1.1% year over year but missed our estimate of $82.5 billion. The purchase volume of Synchrony declined 3% year over year to $48 billion in the fourth quarter, due to selective consumer spending and credit actions. However, the figure surpassed the consensus estimate of $47.7 billion.

For 2025, SYF anticipates low single-digit growth in period-end loan receivables. Purchase volume growth is expected to indicate credit actions and consumer spending behavior. The company expects the payment rate to be generally in line with 2024. Net revenues are expected to be between $15.2 billion and $15.7 billion, lower from $16.1 billion in 2024. The company expects net charge-offs to be between 5.8% and 6.1% and follow normal seasonal trends, with a peak in the first half of the year. The efficiency ratio is expected to be between 31.5% and 32.5%, up from the 2024 level of 30%.

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