Bread Financial (NYSE:BFH) and Upbound Group (NASDAQ:UPBD) Critical Review

Bread Financial (NYSE:BFH) and Upbound Group (NASDAQ:UPBD) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Analyst Ratings

This is a breakdown of recent recommendations for Bread Financial and Upbound Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bread Financial	1	6	8	0	2.47
Upbound Group	1	2	2	0	2.20

Bread Financial currently has a consensus target price of $110.58, indicating a potential downside of 2.33%. Upbound Group has a consensus target price of $30.67, indicating a potential upside of 56.30%. Given Upbound Group’s higher possible upside, analysts plainly believe Upbound Group is more favorable than Bread Financial.

Dividends

Bread Financial pays an annual dividend of $0.92 per share and has a dividend yield of 0.8%. Upbound Group pays an annual dividend of $1.56 per share and has a dividend yield of 8.0%. Bread Financial pays out 7.2% of its earnings in the form of a dividend. Upbound Group pays out 101.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Upbound Group has increased its dividend for 5 consecutive years. Upbound Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bread Financial	11.95%	18.42%	2.76%
Upbound Group	1.90%	34.53%	7.69%

Volatility & Risk

Bread Financial has a beta of 1.11, indicating that its share price is 11% more volatile than the S&P 500. Comparatively, Upbound Group has a beta of 1.79, indicating that its share price is 79% more volatile than the S&P 500.

Earnings and Valuation

This table compares Bread Financial and Upbound Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bread Financial	$3.89 billion	1.12	$518.00 million	$12.82	8.83
Upbound Group	$4.70 billion	0.24	$73.24 million	$1.54	12.74

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

Institutional and Insider Ownership

99.5% of Bread Financial shares are held by institutional investors. Comparatively, 90.3% of Upbound Group shares are held by institutional investors. 1.3% of Bread Financial shares are held by insiders. Comparatively, 1.2% of Upbound Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Bread Financial beats Upbound Group on 9 of the 17 factors compared between the two stocks.

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.

About Upbound Group

Upbound Group, Inc. leases household durable goods to customers on a lease-to-own basis in the United States, Puerto Rico, and Mexico. It operates through four segments: Rent-A-Center, Acima, Mexico, and Franchising. The company's brands, such as Rent-A-Center and Acima that facilitate consumer transactions across a range of store-based and virtual channels. It offers furniture comprising mattresses, tires, consumer electronics, appliances, tools, handbags, computers, smartphones, and accessories. It also provides merchandise on an installment sales basis; and the lease-to-own transaction to consumers who do not qualify for traditional financing, the lease to-own transaction through staffed or unstaffed kiosks located in third-party retailer's locations, and other virtual options. It operates retail installment sales stores under the Get It Now and Home Choice names; lease-to-own and franchised lease-to-own stores under the Rent-A-Centre, ColorTyme, and RimTyme names; and company-owned stores and e-commerce platform through rentacenter.com. The company was formerly known as Rent-A-Center, Inc. and changed its name to Upbound Group, Inc. in February 2023. Upbound Group, Inc. was founded in 1960 and is based in Plano, Texas.