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The 2014 All-America Research Team: Consumer Finance, No. 3: Kenneth Bruce
Total appearances: 7
Team debut: 2008
For a fifth year in a row,Kenneth Bruceof Bank of America Merrill Lynch captures third place. He is sanguine about the U.S. consumer finance industry’s prospects, noting that credit costs are likely to remain well below historical norms, driven in part by an improving macroeconomic backdrop. “Importantly, we think, loan growth will accelerate for credit card issuers, supporting better top-line growth and valuations on the related stocks,” explains the San Francisco–based analyst. “Growth could be the upside surprise for credit card stocks, though we doubt it will undermine the healthy capital returns witnessed over the past few years.” One standout in the sector is Discover Financial Services, says Bruce, because its combination of top-line growth, expense oversight and capital management, in the form of buybacks, will increase earnings per share, which in turn will bolster the share price. He further points out that the Riverwoods, Illinois–based credit card issuer is insulated from the geopolitical issues affecting its more internationally focused rivals. “Ken does a fantastic job of putting the industry into perspective and [detailing] how each company fits into the food chain,” one fund manager declares.