Wolfe Research has highlighted four consumer finance companies it believes merit investor attention as the sector shows tentative signs of recovery. The brokerage's review balanced improving indicators in consumer credit and lending against industry challenges such as higher customer acquisition spending and muted consumer outlays.
Sector context
Wolfe's assessment followed a mixed set of fourth-quarter results across consumer finance names. While some firms reported accelerating purchase volumes and stronger net interest income, the research house flagged a rise in expenses driven largely by marketing and customer acquisition efforts. At the same time, slower consumer spending remains a potential drag on the sector's near-term performance.
Capital One (NYSE: COF)
Wolfe Research retained an Outperform rating on Capital One and set a year-end 2026 price target of $280. The report noted that the stock fell about 7.6% after the company's earnings release, a move attributed to misses on marketing expense expectations. Despite that reaction, Wolfe described Capital One's current valuation, roughly 8.9 times 2027 EPS, as attractive.
Analysts at Wolfe see meaningful improvement in the bank's earnings power, forecasting a rise to $24 to $26 per share by 2027. The firm also pointed to the strategic rationale behind Capital One's recent acquisition of Brex, while acknowledging that the deal introduces near-term integration complexity. Over the longer term, Wolfe expects growth opportunities within the corporate card and expense management markets to underpin returns in the low 20% range.
Synchrony Financial (NYSE: SYF)
Synchrony was also rated Outperform by Wolfe, with a year-end 2026 price target of $90. The stock dropped about 5.8% after reporting, as the company disclosed higher upfront expenses. Wolfe characterized those costs as timing-related rather than indicative of a permanent downward reset to earnings.
Wolfe highlighted several pieces of data from Synchrony's fourth quarter: purchase volume growth accelerating by 3.2% and period-end receivables standing at $103.8 billion. Management guidance cited mid-single-digit receivables growth for 2026 and projected net charge-offs in the 5.5% to 6.0% range. For the quarter, Synchrony reported net earnings of $751 million, or $2.04 per diluted share, matching analyst expectations, while revenue of $3.79 billion missed forecasts. At about 7.1 times 2027 EPS, Wolfe views SYF's valuation as favorable relative to its expected returns and its Walmart-driven growth potential and capital return capacity.
American Express (NYSE: AXP)
Wolfe assigned a Peer Perform rating to American Express and placed a fair value range between $365 and $415. The research note observed that AXP has underperformed year-to-date with limited fundamental support for that weakness, suggesting an opportunistic stance in the near term.
Wolfe indicated room for American Express to achieve the high end of its 2026 EPS guidance range of $17.30 to $17.90, citing solid revenue trends, leverage of marketing and operating expenses, and strong credit performance across the card portfolio. Those strengths, the firm argued, should offset elevated and variable costs tied to customer engagement.
In the fourth quarter, American Express posted billed business growth of 9%, and its revenue and EPS were broadly in line with expectations. The company reported quarterly earnings per share of $3.53, slightly below forecasts, while revenue of $18.98 billion exceeded expectations. Additional items noted in the quarter included the renewal of a partnership with the NBA and the issuance of $3.5 billion in new senior notes.
Bread Financial Holdings (NYSE: BFH)
Wolfe rated Bread Financial as Peer Perform and established a fair value range of $66 to $97. The firm described BFH's fourth quarter as strong, with adjusted EPS of $2.07 compared with Street expectations of $0.07, a result driven by improved net interest income and expense control. Revenue for the quarter reached $975 million, topping analyst forecasts.
Bread Financial's stock rose about 7.1% on the day of the earnings release and was up over 10% year-to-date. While Wolfe was constructive on the company's long-term operating outlook, particularly around the prospects for loan growth and improved execution, analysts cautioned that the notable year-to-date outperformance raises the bar for future returns. Management has articulated a target path toward achieving a 24% return on tangible common equity.
Bottom line
Wolfe Research's coverage underscores a differentiated view within consumer finance: valuation and earnings power underpin bullish calls on certain names, while cost pressures and integration risks temper near-term expectations. Investors drawn to the group will likely weigh attractive entry valuations for some issuers against ongoing expense increases and the uncertain trajectory of consumer spending.