Core Insights - Bank of America warns of explosive growth in prediction markets and sports betting, which may lead to excessive consumer debt and loan defaults [1][2] - The rapid expansion of online betting since the Supreme Court overturned the federal ban on sports betting is creating new credit risks for lenders [1] - The financial pressure from betting losses is particularly significant among low-income consumers, especially young males [1][2] Group 1: Market Dynamics - The marketing of gambling products amplifies participation, resulting in rising credit balances and higher loan loss rates [2] - Companies like Bread Financial Holdings, Upstart Holdings, and OneMain Holdings are most vulnerable to the impact of low-income or credit-pressured consumers [2] - The online betting market presents new risks for lenders that have not been historically encountered, necessitating adjustments to underwriting models [2] Group 2: Consumer Behavior and Financial Impact - Recent studies indicate that in states where online gambling is allowed, average credit scores have dropped by nearly 1% and the likelihood of bankruptcy has increased by 28% after four years [1] - A survey cited by Bank of America reveals that 25% of gamblers have missed bill payments, and 45% lack sufficient funds to cover living expenses for three to six months [2] Group 3: Growth of Prediction Markets - Prediction markets have gained popularity by offering binary financial contracts linked to outcomes of elections and sports events, with nominal monthly trading volume exceeding $8.5 billion in October [3] - The growth is largely driven by contracts linked to sports events on platforms like Kalshi, which operates nationwide despite state-level regulatory opposition [3] - The design and gamified interface of these platforms blur the lines between investment and gambling, raising concerns about compulsive behavior and liquidity pressure among young and low-income consumers [3] Group 4: Industry Positioning - Prediction markets claim to offer a fairer model than sports betting companies by providing a neutral trading venue without directly betting against customers [4] - Kalshi's spokesperson emphasizes that their model is federally regulated and offers more transparent pricing, unlike traditional casinos [4] - Polymarket has recently cleared regulatory hurdles to re-enter the U.S. market after reaching a settlement with the Commodity Futures Trading Commission [4]

Core Viewpoint - Bread Financial Holdings, Inc. has announced the pricing of its underwritten public offering of depositary shares representing a 1/40th interest in its Non-Cumulative Perpetual Preferred Stock, Series A, with a liquidation preference of $25 per Depositary Share [1][2]. Group 1: Offering Details - The offering is expected to close on November 25, 2025, and is projected to generate approximately $72.64 million in net proceeds after deducting underwriting discounts and estimated offering expenses [2][3]. - The net proceeds will be used for general corporate purposes, which may include contributions or loans to its subsidiary bank, Comenity Capital Bank, and share repurchases [3]. Group 2: Listing and Regulatory Information - The Company plans to apply for listing the Depositary Shares on The New York Stock Exchange [2]. - The offering is being conducted under an effective registration statement filed with the Securities and Exchange Commission (SEC), and a final prospectus supplement will be available on the SEC's website [4]. Group 3: Company Overview - Bread Financial is a tech-forward financial services company that provides personalized payment, lending, and saving solutions to millions of U.S. consumers, including general purpose credit cards and savings products [6]. - The Company supports growth for recognized brands in various sectors through private label and co-brand credit cards and pay-over-time products [6].

Core Viewpoint - Bread Financial Holdings, Inc. has announced the launch of an underwritten public offering of depositary shares representing a 1/40th interest in its Non-Cumulative Perpetual Preferred Stock, Series A, with a liquidation preference of $25 per Depositary Share [1] Group 1: Offering Details - The offering will be listed on The New York Stock Exchange, and the net proceeds will be used for general corporate purposes, including potential contributions to Comenity Capital Bank and share repurchases [2] - The offering is being managed by Wells Fargo Securities, J.P. Morgan Securities, Morgan Stanley, and RBC Capital Markets as joint bookrunners [3] - The offering is made under an effective registration statement filed with the SEC, and a final prospectus supplement will be available on the SEC's website [4] Group 2: Company Overview - Bread Financial is a tech-forward financial services company providing personalized payment, lending, and saving solutions to millions of U.S. consumers, including general-purpose credit cards and savings products [6]

Core Insights - Zacks Premium provides tools for investors to enhance their stock market engagement and confidence through various resources like daily updates, research reports, and stock screens [1] Zacks Style Scores - Zacks Style Scores rate stocks based on value, growth, and momentum characteristics, serving as complementary indicators to the Zacks Rank [2] - Stocks are rated from A to F, with A indicating the highest potential for outperforming the market [3] Value Score - The Value Style Score focuses on identifying undervalued stocks using financial ratios such as P/E, PEG, and Price/Sales [3] Growth Score - The Growth Style Score emphasizes a company's financial health and future growth potential, analyzing projected and historical earnings, sales, and cash flow [4] Momentum Score - The Momentum Style Score assesses stocks based on price trends and earnings outlook, utilizing factors like one-week price change and monthly earnings estimate changes [5] VGM Score - The VGM Score combines all three Style Scores, providing a comprehensive indicator for investors seeking attractive value, growth, and momentum [6] Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to assist investors in portfolio creation [7] - Stocks rated 1 (Strong Buy) have historically achieved an average annual return of +23.93% since 1988, significantly outperforming the S&P 500 [8] Stock to Watch: Bread Financial Holdings (BFH) - Bread Financial, a tech-forward financial services company, is rated 2 (Buy) on the Zacks Rank with a VGM Score of A [11] - The company has a Momentum Style Score of A, with shares increasing by 0.1% over the past four weeks [12] - Analysts have revised earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate rising by $1.78 to $10.12 per share, and an average earnings surprise of +55.2% [12]

Summary of Bread Financial Conference Call Company Overview - **Company**: Bread Financial - **CFO**: Perry Beberman, with over 30 years of experience in financial services, including 17 years at Bank of America [1][2] Industry Insights - **Consumer Health**: The consumer has shown resilience despite economic challenges, with inflation rising approximately 30% post-pandemic. Real wage growth has outpaced inflation in 8 out of the last 9 quarters, with recent figures showing 3.5% wage growth against 3% inflation [7][12] - **Consumer Behavior**: Consumers are becoming more "choiceful," opting for lower-priced alternatives rather than premium products. This trend is evident in retail, where consumers are adjusting their purchasing decisions based on price sensitivity [8][21] - **Credit Sales**: Credit sales have remained strong through October and early November, although there is caution regarding early November trends due to potential holiday purchasing patterns [8][11] Key Financial Metrics - **Delinquency and Loss Rates**: The company expects a gradual improvement in delinquency trends, with a target loss rate of 6% through the cycle. The current reserve rate stands at approximately 11.7% [20][28] - **Loan Growth**: Loan growth has been slightly negative, but the company anticipates a return to low to mid-single-digit growth rates by 2026, contingent on macroeconomic conditions and consumer health [38][104] Strategic Initiatives - **Partnerships**: The company is focused on expanding its partnerships, particularly in the home vertical, with new signings expected to drive loan growth. The pipeline for new business remains robust, with a preference for smaller, manageable portfolios [47][49] - **Co-brand vs. Private Label**: There is a strategic shift towards co-brand offerings, which are expected to increase as a percentage of total loans. This shift is aimed at capturing a higher-end customer base and improving overall returns [54][58] Market Dynamics - **Competitive Landscape**: The market remains competitive, with the company emphasizing its unique partnership model and disciplined approach to capital management. The company is not pursuing aggressive acquisitions but is open to opportunities that align with its strategic goals [77][117] - **Buy Now, Pay Later (BNPL)**: Bread Financial has been cautious in the BNPL space, focusing on sustainable lending practices rather than competing with irrational market players. The company aims to offer a full suite of products to its brand partners [78][79] Technology and Innovation - **Tech Stack**: The company has made significant investments in its technology platform, which has helped secure partnerships with sophisticated clients like Crypto.com. Continuous improvements in technology are expected to enhance operational efficiency and product offerings [87][90] Consumer Cohorts - **Monitoring Trends**: The company is closely monitoring various consumer segments, including recent graduates and low-FICO individuals, to identify potential risks or opportunities. Currently, there are no significant signs of distress within the consumer base [96][97] Conclusion - Bread Financial is positioned for gradual growth, with a focus on maintaining strong consumer relationships, expanding partnerships, and leveraging technology to enhance its offerings. The company remains cautious yet optimistic about future performance, particularly as it navigates the evolving economic landscape [118][119]

Core Insights - Turtle Creek Asset Management's third-quarter 2025 investor letter indicates a challenging market environment, with the Turtle Creek Equity Fund's net asset value increasing by only 0.4%, underperforming compared to the S&P MidCap 400 index's 7.7% and the S&P/TSX Completion index's 16.3% gains [1] - The letter highlights Bread Financial Holdings, Inc. (NYSE:BFH) as a notable investment, showcasing its strong one-month return of 7.05% and a 52-week gain of 13.63% [2] Fund Performance - The Turtle Creek Synthetic PE Fund increased by 1.4%, while the Turtle Creek United States Equity Fund decreased by 1.0%, and the Turtle Creek Canadian Equity Fund increased by 7.8% during the same period [1] Company Focus: Bread Financial Holdings, Inc. - Bread Financial Holdings, Inc. provides white-labeled credit cards and 'buy now, pay later' lending solutions, serving major brand partners in North America [3] - The company reported revenue of $971 million in the third quarter of 2025, maintaining its position among hedge funds with 30 portfolios holding its stock [4] - Despite its potential, the company is not considered among the top 30 most popular stocks among hedge funds, and the firm believes certain AI stocks may offer better investment opportunities [4]

Core Insights - Bread Financial Holdings, Inc. reported a performance update highlighting a decrease in average credit card and other loans by 1% year-over-year, with net principal losses slightly reduced to $112 million from $120 million [1] - The net loss rate improved to 7.5% in October 2025 from 7.9% in October 2024, while the delinquency rate also decreased to 6.1% from 6.4% [1] Financial Performance - End-of-period credit card and other loans stood at $17.694 billion in October 2025, down from $17.915 billion in October 2024 [1] - Average credit card and other loans were $17.627 billion in October 2025 compared to $17.867 billion in October 2024 [1] - The company experienced a year-over-year change in average credit card and other loans of -1% [1] Delinquency and Loss Rates - The net principal losses for the month ended October 31, 2025, were $112 million, reflecting a decrease from $120 million in the same month of the previous year [1] - The delinquency rate as of October 31, 2025, was reported at 6.1%, down from 6.4% in October 2024 [1] - The company noted that hurricanes Helene and Milton led to a freeze in delinquency progression for affected cardholders, contributing to the lower net principal losses and net loss rate [1]

Core Viewpoint - Investors are evaluating the value proposition of Bread Financial Holdings (BFH) versus American Express (AXP), with a focus on their respective valuation metrics and earnings outlooks [1]. Group 1: Zacks Rank and Earnings Outlook - Both BFH and AXP currently hold a Zacks Rank of 2 (Buy), indicating positive revisions to their earnings estimates and improving earnings outlooks [3]. - The Zacks Rank emphasizes earnings estimates and revisions, which are crucial for investors seeking growth [2]. Group 2: Valuation Metrics - BFH has a forward P/E ratio of 6.29, significantly lower than AXP's forward P/E of 24.12, suggesting that BFH may be undervalued [5]. - The PEG ratio for BFH is 0.47, indicating a favorable valuation relative to its expected earnings growth, while AXP's PEG ratio stands at 1.98 [5]. - BFH's P/B ratio is 0.87, compared to AXP's P/B of 7.87, further highlighting BFH's relative undervaluation [6]. - Based on these valuation metrics, BFH is assigned a Value grade of A, while AXP receives a Value grade of C, indicating that BFH is currently the superior value option [6].

Core Viewpoint - Momentum investing focuses on "buying high and selling higher" rather than traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investors often face challenges in determining the right entry point for fast-moving stocks, which can lead to investments with limited upside or potential downside [2] - A safer approach may involve investing in bargain stocks that have recently shown price momentum, utilizing tools like the Zacks Momentum Style Score to identify these opportunities [3] Group 2: Bread Financial Holdings (BFH) Analysis - Bread Financial Holdings (BFH) has demonstrated a four-week price change of 7.1%, indicating growing investor interest [4] - Over the past 12 weeks, BFH's stock has gained 6%, with a beta of 1.51, suggesting it moves 51% more than the market [5] - BFH has a Momentum Score of A, indicating a favorable time to invest based on momentum [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 currently trading at a Price-to-Sales ratio of 0.62, suggesting it is undervalued at 62 cents for each dollar of sales [7] Group 4: Additional Investment 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 different strategies to help identify potential winning stocks based on various investing styles [9]

Core Insights - Zacks Premium provides various tools for investors to enhance their stock market engagement and confidence [1][2] Zacks Style Scores - Zacks Style Scores rate stocks based on value, growth, and momentum, serving as complementary indicators to the Zacks Rank [3][4] - Each stock receives a rating from A to F, with A indicating the highest potential for market outperformance [4] Value Score - The Value Style Score identifies attractive and discounted stocks using ratios like P/E, PEG, and Price/Sales [4] Growth Score - The Growth Style Score focuses on a company's financial health and future outlook, analyzing projected and historical earnings, sales, and cash flow [5] Momentum Score - The Momentum Style Score helps investors capitalize on price trends by evaluating short-term price changes and earnings estimate revisions [6] VGM Score - The VGM Score combines the three Style Scores to identify stocks with the best value, growth, and momentum characteristics [7] Zacks Rank - The Zacks Rank is a proprietary model that leverages earnings estimate revisions to guide investors in stock selection [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 Recommendation - Bread Financial Holdings (BFH) is highlighted as a 1 (Strong Buy) stock with a VGM Score of A and a Momentum Style Score of A, having increased by 13.3% in the past four weeks [13][14] - Analysts have revised BFH's earnings estimate upwards, with the Zacks Consensus Estimate rising by $0.95 to $9.30 per share, and the company has an average earnings surprise of +55.2% [14]