2 Reasons to Avoid BFH and 1 Stock to Buy Instead

Bread Financial has had an impressive run over the past six months as its shares have beaten the S&P 500 by 25.8%. The stock now trades at $77.81, marking a 39.1% gain. This was partly due to its solid quarterly results, and the performance may have investors wondering how to approach the situation.

Is there a buying opportunity in Bread Financial, or does it present a risk to your portfolio? See what our analysts have to say in our full research report, it’s free for active Edge members.

Why Do We Think Bread Financial Will Underperform?

We’re happy investors have made money, but we're swiping left on Bread Financial for now. Here are two reasons we avoid BFH and a stock we'd rather own.

1. Long-Term Revenue Growth Disappoints

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.

Over the last five years, Bread Financial grew its revenue at a sluggish 1.8% compounded annual growth rate. This fell short of our benchmarks.

2. EPS Growth Has Stalled

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Bread Financial’s flat EPS over the last five years was below its 1.8% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.

Final Judgment

Bread Financial falls short of our quality standards. With its shares beating the market recently, the stock trades at 8.7× forward P/E (or $77.81 per share). While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are more exciting stocks to buy at the moment. Let us point you toward the most dominant software business in the world.

Stocks We Would Buy Instead of Bread Financial

Your portfolio can’t afford to be based on yesterday’s story. The risk in a handful of heavily crowded stocks is rising daily.

The names generating the next wave of massive growth are right here in our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).

Stocks that have made our list include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today.