Core Insights - The Federal Reserve has reduced the benchmark interest rate by 25 basis points to a range of 3.5-3.75%, marking a total reduction of 75 basis points in 2025 after a 1% cut in 2024, and will begin purchasing $40 billion in Treasury Bills [1] Group 1: Fintech Sector Performance - The fintech sector's performance is inversely related to interest rate movements, benefiting from a low-interest-rate environment which supports technological improvement and product innovation [2] - The expansion of mobile and broadband networks, along with advancements in AI and machine learning, positions fintech for significant growth, enhancing banking, payments, and investment solutions [3] Group 2: Recommended Fintech Stocks - Five mid-cap fintech stocks are recommended for investment: EVERTEC Inc. (EVTC), Enova International Inc. (ENVA), LendingClub Corp. (LC), OppFi Inc. (OPFI), and Bread Financial Holdings Inc. (BFH), all of which have favorable Zacks Ranks [4][9] - These stocks are expected to benefit from the Fed's rate cut, with improved earnings estimates for the upcoming year amid growing fintech demand [9] Group 3: Company-Specific Insights - **EVERTEC Inc. (EVTC)**: Engaged in transaction processing primarily in Latin America and the Caribbean, with expected revenue and earnings growth rates of 5.3% and 4% respectively for next year [7][10] - **Enova International Inc. (ENVA)**: Provides online financial services with expected revenue and earnings growth rates of 15.8% and 10.5% respectively for next year [11][12] - **LendingClub Corp. (LC)**: Offers an online marketplace for loans, with expected revenue and earnings growth rates of 13.2% and 35.7% respectively for next year [13] - **OppFi Inc. (OPFI)**: Provides a financial technology platform for consumer credit access, with expected revenue and earnings growth rates of 9.1% and 8.6% respectively for next year [14] - **Bread Financial Holdings Inc. (BFH)**: Focuses on personalized financial solutions, with expected revenue growth of 3.3% and a decline in earnings of -9.6% for next year [15][17]

Core Insights - The company is focused on responsible growth and prudent management as it navigates the macroeconomic environment leading into 2026 [1] - The company has successfully aligned its operations to execute on all three of its capital priorities for the first time in a long time [2] Group 1 - The CEO emphasized the importance of good underwriting practices and doing the right thing in the current economic climate [1] - The company aims to continue managing its capital effectively while maintaining a steady growth trajectory [1]

Summary of Bread Financial Conference Call (December 10, 2025) Company Overview - **Company**: Bread Financial (NYSE: BFH) - **Industry**: Credit Card and Financial Services Key Points Company Strategy and Focus - Bread Financial continues to focus on responsible growth and disciplined risk management, aiming to be a leading provider in the credit card space [1][2] - The company has improved its financial position and is now a capital return story, with solid EPS levels expected moving forward [1] - Operational excellence is emphasized as a key driver for business transformation and investment [3] Consumer Spending and Macroeconomic Environment - Consumer spending has shown resilience, with higher risk bands spending more on travel and entertainment, while lower risk bands focus on non-discretionary items [5] - Inflation has been a concern, but consumers are budgeting well and showing flexibility in spending, particularly during the holiday season [6] - A low single-digit growth of 1%-2% year-over-year in consumer spending is expected for the fourth quarter [8] Loan Growth and Underwriting - Average loans are expected to slightly decrease in 2025, but a return to low to mid-single-digit growth is anticipated for the following year due to improved credit performance and new partnerships [15][17] - The company maintains a cautious underwriting stance, focusing on data-driven decisions rather than a broad loosening of credit standards [23][25] Partnerships and New Business Development - Bread Financial's partner pipeline remains robust, with recent partnerships announced with Bed Bath & Beyond, Furniture First, and Raymour & Flanigan [30] - The company focuses on both acquiring new partners and maintaining existing relationships, with top partners committed until 2028 and beyond [35][54] Credit Performance and Loss Rates - The company has seen improving credit performance, with expectations to come in on the lower end of the 7.8-7.9% loss rate guidance [66] - A further improvement of 30-40 basis points in loss rates is anticipated for the next year, driven by better credit quality and consumer behavior [75][96] Capital Structure and Financial Management - Bread Financial has successfully restructured its capital, achieving a CET1 ratio in the mid-13% to 14% range [139] - The company plans to issue additional preferred shares to further strengthen its capital structure [141] - A focus on returning value to shareholders through dividends and buybacks is maintained, with a strong balance sheet allowing for multiple capital allocation strategies [118][150] Technology and Innovation - The company is leveraging AI and technology to enhance customer service, fraud management, and operational efficiency [128] - Bread Financial is committed to staying competitive by building strong relationships with partners and continuously improving its offerings [130] Market Position and Future Outlook - The company is optimistic about its growth trajectory, with a focus on improving credit quality and expanding its partner base [197] - Bread Financial encourages investors to judge the company based on its consistent outcomes and strong balance sheet, highlighting the potential for future growth [198] Additional Insights - The company has successfully navigated a challenging macroeconomic environment and is positioned for continued improvement in credit quality and operational efficiency [96][197] - Bread Financial's approach to partnerships emphasizes long-term relationships rather than transactional interactions, which is seen as a competitive advantage [135]

Core Insights - Bread Financial Holdings, Inc. reported a performance update highlighting a decrease in net loss rate and delinquency rate year-over-year [1] - The company experienced a 1% decline in average credit card and other loans from November 2024 to November 2025 [1] - The impact of hurricanes Helene and Milton led to a temporary freeze on delinquency progression for affected cardholders, contributing to lower net principal losses [1] Financial Performance - End-of-period credit card and other loans as of November 30, 2025, were $18,094 million, compared to $18,143 million in 2024, reflecting a 1% decrease [1] - Average credit card and other loans decreased from $17,947 million in November 2024 to $17,776 million in November 2025, also a 1% decline [1] - Net principal losses decreased from $118 million in November 2024 to $109 million in November 2025, resulting in a net loss rate of 7.4%, down from 8.0% [1] Delinquency Metrics - The delinquency rate improved from 6.2% in November 2024 to 6.0% in November 2025 [1] - The total amount of 30 days or more delinquencies was $967 million as of November 30, 2025, compared to $1,032 million in 2024 [1] - The total principal amount of credit card and other loans was $16,251 million as of November 30, 2025, down from $16,695 million in 2024 [1]

Market Overview - The market rebound that began in April continued into the third quarter of 2025, with growth and momentum stocks delivering double-digit returns [1] - Small and micro-cap value stocks achieved their best quarterly returns since Q4 2023 [1] Deep Value Strategy Performance - The Deep Value strategy appreciated by +26.50% in Q3 2025, outperforming the S&P 1500 Value Index (+6.29%) and the S&P 600 Value Index (+11.71%) [1] - Year-to-date, the strategy's net returns are +9.20%, compared to +9.28% for the S&P 1500 Value Index and +3.17% for the S&P 600 Value Index [1] Company Highlight: Bread Financial Holdings, Inc. (NYSE:BFH) - Bread Financial Holdings, Inc. is a financial services company offering tech-forward payment and lending solutions, with a one-month return of 13.24% and a 52-week gain of 13.94% [2] - As of December 04, 2025, Bread Financial's stock closed at $72.00 per share, with a market capitalization of $3.29 billion [2] Performance and Transformation of Bread Financial Holdings, Inc. - Bread Financial was the only negative holding during the quarter, with a market share price down 2% [3] - The company has undergone a multi-year transformation to streamline its business model, enhance underwriting processes, and expand brand partnerships [3] - Since the beginning of the transformation in early 2020, capital ratios improved by more than 3x, debt was reduced by $2 billion, and direct-to-consumer deposits increased by over $6 billion [3] - Management has increased credit reserves to 13%, with delinquency rates at half of reserve levels, indicating potential for significant reserve release in the coming years [3] - The company aims for normalized ROTCE in the mid-20% range and normalized earnings above $15 per share, with shares trading at more than 25% normalized earnings yield [3]

Core Insights - Bread Financial Holdings, Inc. will participate in the Goldman Sachs 2025 Financial Services Conference on December 10, 2025 [1] - The company's President and CEO Ralph Andretta, along with CFO Perry Beberman, will engage in a fireside chat at 1:40 p.m. ET, which will be broadcast live [2] Company Overview - Bread Financial is a tech-forward financial services company that offers personalized payment, lending, and saving solutions to millions of U.S. consumers [3] - The company provides general purpose credit cards and savings products, aiming to empower customers and enhance their quality of life [3] - Bread Financial also supports growth for recognized brands in various sectors through private label and co-brand credit cards, as well as pay-over-time products [3]

Core Insights - The article compares Bread Financial Holdings (BFH) and American Express (AXP) to determine which stock is more attractive to value investors [1] Valuation Metrics - BFH has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision activity compared to AXP, which has a Zacks Rank of 3 (Hold) [3] - BFH's forward P/E ratio is 6.65, significantly lower than AXP's forward P/E of 23.59, suggesting that BFH may be undervalued [5] - The PEG ratio for BFH is 0.43, while AXP's PEG ratio is 1.64, indicating that BFH has a better valuation relative to its expected earnings growth [5] - BFH's P/B ratio is 0.93, compared to AXP's P/B of 7.73, further supporting the notion that BFH is undervalued [6] - Based on these metrics, BFH holds a Value grade of A, while AXP has a Value grade of C, making BFH a more attractive option for value investors [6]

Core Insights - The article emphasizes the importance of utilizing Zacks Premium for investors to enhance their stock market strategies and confidence in investing [1][9]. Zacks Style Scores - Zacks Style Scores are complementary indicators that rate stocks based on value, growth, and momentum methodologies, helping investors identify stocks likely to outperform the market in the short term [3][4]. - Each stock is rated from A to F based on its characteristics, with A indicating the highest potential for outperformance [4]. Value Score - The Value Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales, appealing to value investors [4]. Growth Score - The Growth Score assesses a company's financial health and future outlook, considering projected and historical earnings, sales, and cash flow to find stocks with sustainable growth potential [5]. Momentum Score - The Momentum Score identifies optimal times to invest based on price trends and earnings estimate changes, catering to momentum traders [6]. VGM Score - The VGM Score combines the Value, Growth, and Momentum Scores, providing a comprehensive indicator for investors who utilize multiple investing styles [7]. Zacks Rank - The Zacks Rank is a proprietary stock-rating model that leverages earnings estimate revisions to guide investors in building successful portfolios [8]. - Stocks rated 1 (Strong Buy) have historically produced an average annual return of +23.93% since 1988, significantly outperforming the S&P 500 [9]. Stock Highlight: Bread Financial Holdings (BFH) - Bread Financial, a tech-forward financial services company, is currently rated 2 (Buy) on the Zacks Rank and has a VGM Score of A, indicating strong investment potential [12][13]. - The company has a forward P/E ratio of 6.65, making it attractive for value investors, and has seen positive earnings estimate revisions, with the consensus estimate for fiscal 2025 increasing by $1.81 to $10.14 per share [13][14].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," rather than traditional strategies of buying low and waiting for recovery [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point, as stocks can lose momentum when their valuations exceed future growth potential [2] - Investing in bargain stocks that exhibit recent price momentum can be a safer strategy, utilizing tools like the Zacks Momentum Style Score to identify potential opportunities [3] Group 2: Bread Financial Holdings (BFH) Analysis - Bread Financial Holdings (BFH) has shown a four-week price change of 9%, indicating growing investor interest [4] - BFH has gained 0.7% over the past 12 weeks, with a beta of 1.51, suggesting it moves 51% more than the market [5] - The stock has a Momentum Score of B, indicating a favorable time to invest [6] Group 3: Earnings Estimates and Valuation - An upward trend in earnings estimate revisions has contributed to BFH earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [7] - BFH is trading at a Price-to-Sales ratio of 0.66, suggesting it is undervalued, as investors pay only 66 cents for each dollar of sales [7] Group 4: Additional Opportunities - Besides BFH, there are other stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, presenting further investment opportunities [8] - The Zacks Premium Screens offer over 45 strategies tailored to help investors find winning stock picks [9]

Company Performance - Bread Financial Holdings (BFH) has seen its stock price increase by 8.4% over the past month, reaching a new 52-week high of $68.72 [1] - Year-to-date, the stock has gained 10.5%, outperforming the Zacks Finance sector's 14.3% gain and the Zacks Financial - Miscellaneous Services industry's decline of 7.1% [1] Earnings and Revenue - The company has consistently beaten earnings estimates, reporting EPS of $4.02 against a consensus estimate of $2.11 in its last earnings report on October 23, 2025, and exceeding revenue estimates by 0.46% [2] - For the current fiscal year, earnings are projected at $10.14 per share with revenues of $3.82 billion, reflecting a 33.42% increase in EPS but a slight revenue decline of 0.46% [3] - The next fiscal year is expected to see earnings drop to $9.12 per share, while revenues are anticipated to rise to $3.95 billion, indicating a year-over-year change of -10.09% in EPS and 3.27% in revenues [3] Valuation Metrics - Bread Financial has a Value Score of A, with Growth and Momentum Scores of C, resulting in a combined VGM Score of A [6] - The stock trades at 6.7 times the current fiscal year EPS estimates, significantly lower than the peer industry average of 12.2 times [7] - On a trailing cash flow basis, the stock trades at 5.7 times compared to the peer group's average of 9.8 times, and it has a PEG ratio of 0.43, positioning it favorably for value investors [7] Zacks Rank - The stock currently holds a Zacks Rank of 2 (Buy), supported by positive earnings estimate revisions from analysts [8] - Bread Financial meets the criteria for selection based on Zacks Rank and Style Scores, indicating potential for further gains [9] Industry Context - The Financial - Miscellaneous Services industry is performing well, ranking in the top 33% of all industries, suggesting favorable conditions for both Bread Financial and its peers [12]