Bread Financial (NYSE:BFH) versus Community Financial System (NYSE:CBU) Head-To-Head Comparison

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

Risk and Volatility

Bread Financial has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, Community Financial System has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500.

Institutional and Insider Ownership

99.5% of Bread Financial shares are held by institutional investors. Comparatively, 73.8% of Community Financial System shares are held by institutional investors. 0.6% of Bread Financial shares are held by insiders. Comparatively, 1.0% of Community Financial System shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Bread Financial pays an annual dividend of $0.84 per share and has a dividend yield of 1.4%. Community Financial System pays an annual dividend of $1.88 per share and has a dividend yield of 3.4%. Bread Financial pays out 14.2% of its earnings in the form of a dividend. Community Financial System pays out 51.2% 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. Community Financial System has increased its dividend for 33 consecutive years. Community Financial System is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Bread Financial and Community Financial System”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bread Financial	$4.80 billion	0.58	$277.00 million	$5.91	10.14
Community Financial System	$940.71 million	3.15	$182.48 million	$3.67	15.27

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bread Financial	6.05%	13.10%	1.83%
Community Financial System	19.91%	10.71%	1.17%

Analyst Recommendations

This is a breakdown of current recommendations for Bread Financial and Community Financial System, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bread Financial	3	6	3	0	2.00
Community Financial System	0	3	0	1	2.50

Bread Financial currently has a consensus price target of $66.20, suggesting a potential upside of 10.44%. Community Financial System has a consensus price target of $68.00, suggesting a potential upside of 21.32%. Given Community Financial System’s stronger consensus rating and higher probable upside, analysts plainly believe Community Financial System is more favorable than Bread Financial.

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 Community Financial System

Community Bank System, Inc. operates as the bank holding company for Community Bank, N.A. that provides various banking and other financial services to retail, commercial, institutional, and municipal customers. It operates through three segments: Banking, Employee Benefit Services, and All Other. The company offers various deposits products, such as interest and noninterest -bearing checking, savings, and money market deposit accounts, as well as time deposits. It also provides loans, including consumer mortgages; general purpose commercial and industrial loans, and mortgages on commercial properties; paycheck protection program loans; installment loans that are originated through selected dealerships and are secured by automobiles, marine, and other recreational vehicles; personal installment loans and check credit lines of credit for consumers; and home equity products. In addition, the company offers broker-dealer and investment advisory; cash management, investment, and treasury services; asset management services; and employee benefit services, as well as operates as a full-service insurance agency that provides personal and commercial lines of insurance, and other risk management products and services. Further, it offers contribution plan administration, employee benefit trust, collective investment fund, retirement plan administration and benefit consulting, fund administration, transfer agency, actuarial and benefit consulting, and health and welfare consulting services; and act as an investor in residential and commercial real estate activities. Additionally, the company offers wealth management, retirement planning, higher educational planning, fiduciary, risk management, trust, and personal financial planning services; and investment alternatives, including stocks, bonds, mutual funds, and insurance and advisory products, as well as master recordkeeping services. Community Bank System, Inc. was founded in 1866 and is headquartered in DeWitt, New York.