Bread Financial Holdings, Inc. (BFH)
Valuation Overview•Is Bread Financial Holdings, Inc. Overvalued or Undervalued?
Trading at a discount across both intrinsic cash flow and relative peer multiples, indicating a strong margin of safety.
Moderate quality score of 58/100, reflecting stable operating margins and manageable leverage.
Analysts remain cautious, with consensus price targets indicating limited room for upside expansion.
Verdict: Average quality business weighed down by significant solvency concerns.
Wall Street is cautious, forecasting potential downside. This outlook is strongly supported by highly attractive capital returns, driven predominantly by aggressive share repurchases.
BFH demonstrates strong business quality with robust profitability and healthy margins. However, this is severely offset by a highly leveraged balance sheet (Debt/EBITDA > 4.0x) and elevated financial risk.
The company maintains stable top-line performance paired with highly explosive earnings growth (34.9% EPS 3Y CAGR). Operating efficiency remains adequate with margins around 13.1%.
| Financial Metric | Trend (12Q) | Latest Qtr | 1Y Growth | 3Y CAGR | 5Y CAGR | 10Y CAGR |
|---|---|---|---|---|---|---|
| Revenue | $1.2B | -2.1% | — | — | -3.1% | |
| EBITDA | $66.0M | — | +18.9% | — | — | |
| Net Income | $53.0M | +87.0% | +32.4% | — | -1.4% | |
| EPS (Diluted) | $1.16 | +99.3% | +34.9% | +19.7% | +2.2% | |
| Free Cash Flow | $568.0M | +12.5% | +5.5% | +2.7% | — |
| Metric | TTM | 3Y Avg | 5Y Avg | 10Y Avg |
|---|---|---|---|---|
| Gross Margin | 63.3% | 57.8% | 57.7% | 54.3% |
| Operating Margin | 13.1% | 13.2% | 15.7% | 22.1% |
| Net Margin | 11.0% | 10.2% | 12.1% | 11.4% |
| FCF Margin | 44.3% | 40.6% | 41.4% | 41.0% |
| Quarter | EPS Est. | EPS Act. | Surprise | EPS | Rev |
|---|---|---|---|---|---|
| Q2'26Latest | $3.00 | $4.18 | +39.3% | ||
| Q1'26 | $0.40 | $2.07 | +417.5% | ||
| Q4'25 | $2.11 | $4.02 | +90.5% | ||
| Q3'25 | $1.85 | $3.14 | +69.7% | ||
| Q2'25 | $2.10 | $2.86 | +36.2% | ||
| Q1'25 | $0.33 | $0.41 | +24.2% | ||
| Q4'24 | $1.94 | $1.84 | -5.2% | ||
| Q3'24 | $1.77 | $2.66 | +50.3% |
Total return is +95.8% (1Y), outperforming the benchmark by +70.8%
| Period | Total Return | vs S&P 500 (Alpha) | Dividend Contribution |
|---|---|---|---|
| YTD | +36.6% | +27.3% | — |
| 1Y | +95.8% | +70.8% | +1.7% |
| 3YCAGR | +51.5% | +31.5% | +8.5% |
| 5YCAGR | +5.3% | -8.1% | +5.1% |
| 10YCAGR | -3.4% | -17.4% | — |
The S&P 500 is at 31.3x trailing P/E — Expensive relative to historical averages.
Quick answers to common questions about Bread Financial Holdings, Inc. (BFH) valuation, health, and returns.
Bread Financial Holdings, Inc. is estimated to be undervalued under our discounted cash flow framework. relative multiples indicate the stock is Cheap versus peers compared to industry peers. undervalued (implying +28.8% upside to DCF intrinsic value of $131.87)
Bread Financial Holdings, Inc. has multiple valuation anchors: DCF Intrinsic Value: $131.87 | Peer Relative Fair Value: $129.53 | Wall Street Analyst Target: $96.25 (implying -6.0% upside). A convergence of these signals offers higher conviction.
Bread Financial Holdings, Inc. displays fair financial health with a composite quality score of 58/100, supported by a Piotroski F-Score of 7/9, Return on Invested Capital (ROIC) of 5.6%.
Bread Financial Holdings, Inc. pays a 0.9% dividend yield, covered by a 8% payout ratio with 1 years of growth, supplemented by a 6.6% buyback yield.
Bread Financial Holdings, Inc.'s current growth trajectory is Decelerating. The company achieved -2.1% 1Y revenue growth and +99.3% 1Y EPS growth, compared to its 3Y revenue CAGR of N/A.
Wall Street consensus is Hold based on 37 analysts, beating EPS expectations in 83% of recent quarters with a 6-quarter streak. The consensus price target represents a -6.0% change from current levels.
Investment risks for Bread Financial Holdings, Inc. include: -19.3% 1-year max drawdown, high beta (1.34x market volatility). Volatility risk is characterized by a beta of 1.34x.
No. These computations are purely quantitative model outputs for informational purposes. They do not account for qualitative management shifts or macro events. Always consult a licensed RIA before buying or selling shares.
Disclaimer: This page is for informational purposes only and does not constitute financial advice. All valuation models, scores, and target estimates are automated computations under stated assumptions and should not be relied upon as the sole basis for any investment decision.