Analyzing Bread Financial (NYSE:BFH) & Yirendai (NYSE:YRD)

Yirendai (NYSE:YRD) and Bread Financial (NYSE:BFH) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.

Valuation and Earnings

This table compares Yirendai and Bread Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Yirendai	$817.84 million	0.11	$7.80 million	($1.18)	-0.86
Bread Financial	$4.70 billion	0.89	$518.00 million	$12.82	8.49

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

Dividends

Yirendai pays an annual dividend of $0.20 per share and has a dividend yield of 19.7%. Bread Financial pays an annual dividend of $0.92 per share and has a dividend yield of 0.8%. Yirendai pays out -16.9% of its earnings in the form of a dividend. Bread Financial pays out 7.2% 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. Yirendai is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

2.0% of Yirendai shares are owned by institutional investors. Comparatively, 99.5% of Bread Financial shares are owned by institutional investors. 42.2% of Yirendai shares are owned by company insiders. Comparatively, 1.3% of Bread Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current recommendations for Yirendai and Bread Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Yirendai	1	0	0	0	1.00
Bread Financial	1	5	8	1	2.60

Bread Financial has a consensus target price of $112.08, suggesting a potential upside of 2.98%. Given Bread Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Bread Financial is more favorable than Yirendai.

Volatility & Risk

Yirendai has a beta of 1.14, meaning that its share price is 14% more volatile than the S&P 500. Comparatively, Bread Financial has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Yirendai	-14.35%	-7.58%	-5.21%
Bread Financial	11.95%	18.42%	2.76%

Summary

Bread Financial beats Yirendai on 13 of the 17 factors compared between the two stocks.

About Yirendai

Yiren Digital Ltd. provides financial services through an AI-powered platform in China. Its platform provides a suite of financial and lifestyle services. The company offers financial services, which provides a portfolio of loan products to borrowers; insurance brokerage services; and consumption and lifestyle services, including non-financial products and services to meet various consumer needs. It supports clients at various growth stages, addressing financing needs arising from consumption and production activities, and augmenting the well-being and security of individuals, families, and businesses. The company was formerly known as Yirendai Ltd. and changed its name to Yiren Digital Ltd. in September 2019. Yiren Digital Ltd. was founded in 2012 and is based in Beijing, the People's Republic of China. Yiren Digital Ltd. operates as a subsidiary of CreditEase Holdings (Cayman) Limited.

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.