SLM (NASDAQ:SLM) and Bread Financial (NYSE:BFH) Head-To-Head Analysis

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

Dividends

SLM pays an annual dividend of $0.44 per share and has a dividend yield of 2.0%. Bread Financial pays an annual dividend of $0.84 per share and has a dividend yield of 2.1%. SLM pays out 13.8% of its earnings in the form of a dividend. Bread Financial pays out 10.6% 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. Bread Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares SLM and Bread Financial’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SLM	$2.84 billion	1.70	$581.39 million	$3.20	6.88
Bread Financial	$5.17 billion	0.39	$718.00 million	$7.94	5.14

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

Volatility & Risk

SLM has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Bread Financial has a beta of 1.92, meaning that its stock price is 92% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
SLM	25.15%	45.65%	2.63%
Bread Financial	8.08%	14.44%	1.88%

Insider & Institutional Ownership

98.9% of SLM shares are owned by institutional investors. Comparatively, 99.5% of Bread Financial shares are owned by institutional investors. 0.9% of SLM shares are owned by company insiders. Comparatively, 0.6% of Bread Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings for SLM and Bread Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SLM	0	2	8	0	2.80
Bread Financial	4	7	3	0	1.93

SLM currently has a consensus price target of $21.32, suggesting a potential downside of 3.14%. Bread Financial has a consensus price target of $39.17, suggesting a potential downside of 4.03%. Given SLM’s stronger consensus rating and higher probable upside, equities analysts plainly believe SLM is more favorable than Bread Financial.

Summary

SLM beats Bread Financial on 9 of the 16 factors compared between the two stocks.

About SLM

SLM Corporation, through its subsidiaries, originates and services private education loans to students and their families to finance the cost of their education in the United States. It is also involved in the provision of retail deposit accounts, including certificates of deposit, money market accounts, and high-yield savings accounts; and interest-bearing omnibus accounts. The company was formerly known as New BLC Corporation and changed its name to SLM Corporation in December 2013. SLM Corporation was founded in 1972 and is headquartered in Newark, Delaware.

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.