Analyzing Bread Financial (NYSE:BFH) and Applied Digital (NASDAQ:APLD)

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

Institutional and Insider Ownership

65.7% of Applied Digital shares are owned by institutional investors. Comparatively, 99.5% of Bread Financial shares are owned by institutional investors. 9.5% of Applied Digital shares are owned by company insiders. Comparatively, 0.9% of Bread Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Applied Digital and Bread Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Applied Digital	1	0	12	2	3.00
Bread Financial	3	6	5	0	2.14

Applied Digital currently has a consensus price target of $37.00, suggesting a potential upside of 47.23%. Bread Financial has a consensus price target of $80.09, suggesting a potential upside of 11.11%. Given Applied Digital’s stronger consensus rating and higher possible upside, research analysts plainly believe Applied Digital is more favorable than Bread Financial.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Applied Digital	$144.19 million	48.73	-$231.07 million	($0.54)	-46.54
Bread Financial	$4.70 billion	0.66	$518.00 million	$10.84	6.65

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Applied Digital	-43.49%	-13.53%	-4.16%
Bread Financial	11.02%	17.92%	2.61%

Volatility & Risk

Applied Digital has a beta of 7.2, indicating that its share price is 620% more volatile than the S&P 500. Comparatively, Bread Financial has a beta of 1.2, indicating that its share price is 20% more volatile than the S&P 500.

Summary

Bread Financial beats Applied Digital on 8 of the 15 factors compared between the two stocks.

About Applied Digital

Applied Digital Corporation designs, develops, and operates datacenters in North America. Its datacenters provide digital infrastructure solutions to the high-performance computing industry. The company also provides artificial intelligence cloud services, high performance computing datacenter hosting, and crypto datacenter hosting services. The company was formerly known as Applied Blockchain, Inc. and changed its name to Applied Digital Corporation in November 2022. Applied Digital Corporation is based in Dallas, Texas.

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.