Bread Financial Holdings Inc (BFH, Financial) has recently caught the attention of investors with its notable stock performance. The company's market capitalization stands at $1.71 billion, with a current stock price of $34.51. Over the past week, BFH has seen a marginal gain of 0.04%, but it's the 14.21% gain over the past three months that has truly piqued market interest. This increase in stock price is particularly significant when considering the company's GF Value of $47.94, which suggests that the stock is modestly undervalued. This is a positive shift from the past GF Value of $67.5, which indicated a possible value trap, advising investors to think twice before investing.
Introduction to Bread Financial Holdings Inc
Bread Financial Holdings Inc operates within the credit services industry, providing a suite of financial products including private label and co-branded credit cards, loyalty programs, and marketing services. The company emerged from the combination of JCPenney's credit card processing unit and The Limited's credit card bank business. Bread Financial's credit card business, which partners with retailers to market its credit cards, is the company's most financially significant unit. Additionally, Bread Financial retains a minority interest in its LoyaltyOne division, which runs Canada's largest airline miles loyalty program and provides marketing services to grocery chains in Europe and Asia. 
Assessing Profitability
Bread Financial's profitability is robust, with a Profitability Rank of 7 out of 10, indicating a strong likelihood of the company maintaining its profitability. The company's Return on Equity (ROE) is an impressive 26.56%, outperforming 93.37% of its peers in the industry. Its Return on Assets (ROA) stands at 3.15%, which is better than 63.75% of the industry. Bread Financial has also maintained profitability over the past 10 years, a testament to its financial stability and operational efficiency. 
Growth Trajectory of Bread Financial
Despite its strong profitability, Bread Financial's Growth Rank is a low 2 out of 10. The company's 3-Year Revenue Growth Rate per Share is 7.70%, which is better than 57.46% of the industry. However, the 5-Year Revenue Growth Rate per Share shows a decline of 1.30%, although it still outperforms 37.01% of the industry. Looking ahead, the Total Revenue Growth Rate (Future 3Y To 5Y Est) is projected at -2.13%, which is better than only 5% of the industry. The 3-Year EPS without NRI Growth Rate is a strong 40.90%, surpassing 81.17% of the industry, while the 5-Year EPS without NRI Growth Rate is a modest 3.10%, better than 42.86% of the industry. The EPS Growth Rate (Future 3Y To 5Y Est) is expected to be -14.20%, which is still better than 8.7% of the industry. 
Key Shareholders in Bread Financial
Among the notable shareholders of Bread Financial, Richard Pzena (Trades, Portfolio) stands out with 807,557 shares, representing a 1.64% share percentage. Following him are HOTCHKIS & WILEY with 392,260 shares (0.8% share percentage), and Steven Cohen (Trades, Portfolio) with 219,015 shares (0.44% share percentage). These significant stakeholders reflect a vote of confidence in the company's financial health and future prospects.
Competitive Landscape
When compared to its competitors, Bread Financial holds its ground with a market cap of $1.71 billion. Its closest competitors include Enova International Inc (ENVA, Financial) with a market cap of $1.67 billion, Navient Corp (NAVI, Financial) at $1.85 billion, and Federal Agricultural Mortgage Corp (AGM.A, Financial) with a market cap of $1.89 billion. These companies operate within the same industry and have similar market capitalizations, making them direct competitors to Bread Financial.
Conclusion
In summary, Bread Financial Holdings Inc has demonstrated a strong stock performance with a recent 14.21% gain over three months, and its current valuation suggests that it is modestly undervalued. The company's profitability is solid, with high ROE and ROA percentages, and it has maintained profitability consistently over the past decade. However, its growth prospects present a mixed picture, with some areas of concern in future revenue and EPS estimates. The company's significant shareholders, including Richard Pzena (Trades, Portfolio), HOTCHKIS & WILEY, and Steven Cohen (Trades, Portfolio), maintain substantial stakes in the company, indicating their belief in its potential. Finally, when compared to its competitors, Bread Financial remains competitive in the credit services industry. Investors should consider these factors carefully when evaluating Bread Financial as a potential addition to their portfolios.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
