Consumer Portfolio Services (NASDAQ:CPSS) and Bread Financial (NYSE:BFH) Critical Analysis

Consumer Portfolio Services (NASDAQ:CPSS) and Bread Financial (NYSE:BFH) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Institutional and Insider Ownership

47.6% of Consumer Portfolio Services shares are held by institutional investors. Comparatively, 99.5% of Bread Financial shares are held by institutional investors. 63.8% of Consumer Portfolio Services shares are held by company insiders. Comparatively, 1.3% of Bread Financial shares are held 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Consumer Portfolio Services and Bread Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Consumer Portfolio Services	0	1	0	0	2.00
Bread Financial	1	8	8	0	2.41

Bread Financial has a consensus target price of $111.71, indicating a potential upside of 14.06%. Given Bread Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Bread Financial is more favorable than Consumer Portfolio Services.

Risk and Volatility

Consumer Portfolio Services has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500. Comparatively, Bread Financial has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Earnings & Valuation

This table compares Consumer Portfolio Services and Bread Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Consumer Portfolio Services	$434.47 million	0.49	$19.33 million	$1.02	9.55
Bread Financial	$4.70 billion	0.79	$518.00 million	$12.68	7.72

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Consumer Portfolio Services	4.99%	7.48%	0.55%
Bread Financial	11.19%	17.24%	2.56%

Summary

Bread Financial beats Consumer Portfolio Services on 12 of the 14 factors compared between the two stocks.

About Consumer Portfolio Services

Consumer Portfolio Services, Inc. is a specialty finance company focused on automobile lending. It provides financing to consumers who may have difficulty obtaining loans through traditional sources, including borrowers with limited or impaired credit histories. The company works with franchise and independent automobile dealers across the United States, purchasing retail installment contracts they originate for vehicle buyers. Consumer Portfolio Services also services the contracts it acquires and uses funding arrangements that include asset-backed securitizations.

About Bread Financial

Bread Financial is a consumer financial services company that works with retailers and other businesses to offer payment and lending products. Its services include private-label and co-branded credit cards, installment payment options and other financing solutions designed for purchases with participating merchants. The company also offers deposit products through Bread Savings, including online savings accounts and certificates of deposit. Its products serve consumers primarily in the United States.