Bread Financial Holdings (BFH) just closed out FY 2025 with Q4 revenue of US$602 million and basic EPS of US$1.15, while trailing twelve month EPS came in at US$10.96 on revenue of about US$2.6 billion. Over the last year, revenue has moved from US$2.44 billion to roughly US$2.60 billion on a trailing basis, with net income excluding extra items rising from US$279 million to US$521 million, setting up a cleaner profitability picture. With net profit margin now at 20% and earnings quality described as high, the latest numbers give investors a clearer read on how Bread Financial’s margins are holding up into the new fiscal year.

See our full analysis for Bread Financial Holdings.

With the headlines out of the way, the next step is to see how these results line up with the dominant narratives around Bread Financial, where some views are backed up by the numbers and others face a tougher test.

TTM earnings jump 86.7% while five year trend is weaker

• Over the last 12 months, net income excluding extra items is US$521 million on about US$2.6b of revenue, compared with US$279 million on roughly US$2.4b a year earlier. That 86.7% earnings growth sits against a five year record where earnings declined about 7.6% per year.
• What stands out for a more bullish take is how the stronger trailing year, with a 20% net margin and US$10.96 of trailing EPS, sits beside that softer five year trend. This means anyone arguing for a long term earnings recovery still has to square the recent strength with several years of prior decline.

Credit risk flagged with 5.6% non performing loans

• The data highlights a 5.6% non performing loan ratio, categorized here as high. This sits alongside the higher net margin and earnings quality description, so you are seeing better profitability at the same time as a credit quality flag.
• Bears who focus on credit risk point to that 5.6% bad loans figure as a key pressure point. Yet it currently coexists with US$521 million of trailing net income and a 20% margin, so the cautious view is really about how that credit profile could interact with profits rather than saying current profitability is weak.
  • On one hand, the improved margin compared with 11.4% last year and higher trailing earnings show that recent performance is solid on the income statement.
  • On the other hand, a higher level of non performing loans can feed into provisions or write offs, which is why more bearish voices focus on that single number as a potential headwind.

Have a closer look at how bears frame those credit concerns against the recent margin improvement before you decide which risk matters most. 🐻 Bread Financial Holdings Bear Case

P/E of 6.4x versus DCF fair value of US$121.00

• At a share price of US$73.03, the P/E sits at 6.4x compared with 8.4x for the US consumer finance industry and 40.3x for peers. A DCF fair value of US$121.00 implies the shares trade well below that particular intrinsic value estimate.
• Supporters who lean bullish on valuation often highlight this gap. They argue that the mix of a lower than industry P/E and a DCF fair value above the current price, together with the recent 86.7% earnings growth and 20% net margin, heavily supports the idea that the market is not fully reflecting the trailing profitability, even as earnings are forecast to decline about 9% per year over the next three years.
  • The contrast between a low multiple and strong trailing earnings quality is a key part of that positive angle, especially with revenue forecast to grow around 15.3% per year.
  • At the same time, the forecast earnings decline and the 5.6% non performing loan ratio are the main checks on that bullish valuation story, so the case is not one sided.

If you want to see how valuation focused bulls set out their full case on these numbers, this is a useful next stop. 🐂 Bread Financial Holdings Bull Case

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Bread Financial Holdings's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

See What Else Is Out There

Bread Financial’s story mixes stronger recent profits with a 5.6% non performing loan ratio and forecasts for earnings to decline even as revenue is expected to grow.

If you would rather focus on companies where balance sheet risk is less of a question, check out solid balance sheet and fundamentals stocks screener (389 results) today and zero in on businesses built on sturdier financial footing.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.