Bread Financial (NYSE:BFH) vs. Regional Management (NYSE:RM) Financial Comparison

Bread Financial (NYSE:BFH) and Regional Management (NYSE:RM) are both small-cap business services companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, profitability, analyst recommendations, dividends, valuation, earnings and risk.

Dividends

Bread Financial pays an annual dividend of $0.84 per share and has a dividend yield of 2.4%. Regional Management pays an annual dividend of $1.20 per share and has a dividend yield of 4.9%. Bread Financial pays out 5.9% of its earnings in the form of a dividend. Regional Management pays out 73.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Valuation & Earnings

This table compares Bread Financial and Regional Management’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bread Financial	$5.17 billion	0.34	$718.00 million	$14.32	2.48
Regional Management	$551.40 million	0.44	$15.96 million	$1.64	15.04

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bread Financial	13.87%	26.24%	3.34%
Regional Management	2.89%	8.85%	1.64%

Risk and Volatility

Bread Financial has a beta of 1.93, suggesting that its stock price is 93% more volatile than the S&P 500. Comparatively, Regional Management has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Bread Financial and Regional Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bread Financial	4	7	2	0	1.85
Regional Management	0	2	0	0	2.00

Bread Financial currently has a consensus target price of $36.08, suggesting a potential upside of 1.70%. Regional Management has a consensus target price of $29.00, suggesting a potential upside of 17.60%. Given Regional Management’s stronger consensus rating and higher possible upside, analysts clearly believe Regional Management is more favorable than Bread Financial.

Insider & Institutional Ownership

99.5% of Bread Financial shares are held by institutional investors. Comparatively, 98.9% of Regional Management shares are held by institutional investors. 0.2% of Bread Financial shares are held by insiders. Comparatively, 9.8% of Regional Management shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Bread Financial beats Regional Management on 10 of the 16 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 Regional Management

Regional Management Corp., a diversified consumer finance company, engages in the provision of various installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders in the United States. It offers small and large installment loans secured by non-essential household goods and/or vehicles; and retail loans to finance the purchase of furniture, appliances, and other retail products. The company also provides insurance products, including credit life, accident and health, involuntary unemployment, and personal property insurance, as well as vehicle single interest, credit, and collateral protection insurance; and reinsurance products. In addition, its loans are sourced through branches, centrally managed direct mail campaigns, and digital partners, as well as its consumer website. The company was incorporated in 1987 and is headquartered in Greer, South Carolina.