Bread Financial Holdings (LID) AI Stock Analysis

Company Guidance

For full year 2026, Bread Financial expects average loan growth up approximately 4% year-over-year, total revenue growth up approximately 5%, full year net interest margin to be slightly higher than 2025, positive operating leverage excluding the pretax impact from debt repurchases, a full year net loss rate below 7.0% with an expected range of between 6.9% and 7.0% compared to prior guidance of 7.0% to 7.1%, and a normalized effective tax rate in the range of 25% to 27%; fourth quarter net interchange revenue as a percent of credit sales is expected to be consistent with third quarter results, net interest margin is expected to compress modestly on a sequential basis, expenses are anticipated to be higher sequentially, net loss rate is expected to be below 7%, and minimal repurchase activity is expected absent a preferred stock offering, while any additional preferred issuance will be opportunistic and remain subject to market conditions. Looking ahead, the loss rate is expected to be lower into next year but probably will not improve at the same degree of basis points as observed this year, growth will probably be stable to what was seen this year, and next year net interest margin is expected to be flat to slightly down; the company targets a CET1 ratio of about 12% to 13%, expects consumer deposits to reach 60% to 70% of total funding over a number of years, and remains committed to mid-20s ROTCEs.