Bread Financial (NYSE:BFH) and MidCap Financial Investment (NASDAQ:MFIC) Head to Head Review

MidCap Financial Investment (NASDAQ:MFIC) and Bread Financial (NYSE:BFH) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Insider and Institutional Ownership

28.5% of MidCap Financial Investment shares are held by institutional investors. Comparatively, 99.5% of Bread Financial shares are held by institutional investors. 0.8% of MidCap Financial Investment shares are held by insiders. Comparatively, 0.9% of Bread Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	30.79%	10.33%	4.30%
Bread Financial	11.02%	17.92%	2.61%

Dividends

MidCap Financial Investment pays an annual dividend of $1.52 per share and has a dividend yield of 13.6%. Bread Financial pays an annual dividend of $0.92 per share and has a dividend yield of 1.2%. MidCap Financial Investment pays out 143.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bread Financial pays out 8.5% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of current ratings and price targets for MidCap Financial Investment and Bread Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	0	7	2	0	2.22
Bread Financial	3	6	5	0	2.14

MidCap Financial Investment currently has a consensus price target of $12.75, suggesting a potential upside of 14.45%. Bread Financial has a consensus price target of $80.09, suggesting a potential upside of 5.91%. Given MidCap Financial Investment’s stronger consensus rating and higher probable upside, research analysts clearly believe MidCap Financial Investment is more favorable than Bread Financial.

Risk & Volatility

MidCap Financial Investment has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500. Comparatively, Bread Financial has a beta of 1.26, indicating that its share price is 26% more volatile than the S&P 500.

Valuation and Earnings

This table compares MidCap Financial Investment 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
MidCap Financial Investment	$301.78 million	3.44	$98.82 million	$1.06	10.51
Bread Financial	$4.70 billion	0.69	$518.00 million	$10.84	6.98

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

Summary

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

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.

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.