Head-To-Head Comparison: Affirm (NASDAQ:AFRM) vs. Bread Financial (NYSE:BFH)

Affirm (NASDAQ:AFRM) and Bread Financial (NYSE:BFH) are both business services companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, analyst recommendations, dividends, earnings and institutional ownership.

Profitability

This table compares Affirm and Bread Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Affirm	-39.19%	-25.10%	-7.76%
Bread Financial	13.87%	26.24%	3.34%

Risk & Volatility

Affirm has a beta of 3.6, indicating that its stock price is 260% more volatile than the S&P 500. Comparatively, Bread Financial has a beta of 1.94, indicating that its stock price is 94% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Affirm and Bread Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Affirm	6	8	3	0	1.82
Bread Financial	4	7	1	0	1.75

Affirm presently has a consensus target price of $26.97, suggesting a potential downside of 26.02%. Bread Financial has a consensus target price of $35.00, suggesting a potential downside of 6.39%. Given Bread Financial’s higher possible upside, analysts plainly believe Bread Financial is more favorable than Affirm.

Insider and Institutional Ownership

69.3% of Affirm shares are owned by institutional investors. Comparatively, 99.5% of Bread Financial shares are owned by institutional investors. 13.1% of Affirm shares are owned by company insiders. Comparatively, 0.3% of Bread Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Affirm and Bread Financial’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Affirm	$1.59 billion	7.03	-$985.34 million	($2.49)	-14.62
Bread Financial	$5.17 billion	0.36	$718.00 million	$14.32	2.62

Bread Financial has higher revenue and earnings than Affirm. Affirm is trading at a lower price-to-earnings ratio than Bread Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Bread Financial beats Affirm on 9 of the 14 factors compared between the two stocks.

About Affirm

Affirm Holdings, Inc. operates a platform for digital and mobile-first commerce in the United States, Canada, and internationally. The company's platform includes point-of-sale payment solution for consumers, merchant commerce solutions, and a consumer-focused app. Its commerce platform, agreements with originating banks, and capital markets partners enables consumers to pay for a purchase over time with terms ranging up to 60 months. The company has active merchants covering small businesses, large enterprises, direct-to-consumer brands, brick-and-mortar stores, and companies with an omni-channel presence. Its merchants represent a range of industries, including sporting goods and outdoors, furniture and homewares, travel and ticketing, apparel, accessories, consumer electronics, and jewelry. Affirm Holdings, Inc. was founded in 2012 and is headquartered in San Francisco, California.

About Bread Financial

Bread Financial Holdings, Inc. provides tech-forward payment and lending solutions to customers and consumer-based industries in North America. It offers credit card and other loans financing services, including risk management solutions, account origination, and funding services for private label and co-brand credit card programs, as well as through Bread partnerships; and Comenity-branded general purpose cash-back credit. The company also manages and services the loans it originates for private label, co-brand, and general-purpose credit card programs, and installment loans and split-pay products; and provides marketing, and data and analytics services. In addition, it offers an enhanced digital suite that includes a unified software development kit, which provides access to its suite of products, as well as promotes credit payment options earlier in the shopping experience. Further, the company through Bread, a digital payments platform and robust suite of application programming interfaces allows merchants and partners to integrate online point-of-sale financing and other digital payment products. It offers its products under the Bread CashbackTM, Bread PayTM, and Bread SavingsTM brands. The company was formerly known as Alliance Data Systems Corporation and changed its name to Bread Financial Holdings, Inc. in March 2022. Bread Financial Holdings, Inc. was incorporated in 1995 and is headquartered in Columbus, Ohio.