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Synchrony Financial SYF

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Stock XNYS Rating as of
$45.02 +2.16 (5.04%)
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As of Delayed Price Closed
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Company Report

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Synchrony Financial Earnings: Strong Loan Growth but Credit Costs Are a Drag on Results

Michael Miller

No-moat-rated Synchrony Financial reported decent first-quarter earnings that benefited from a one-time gain from the sale of its Pets Best business. Excluding the impact of the Pets Best transaction, revenue increased 16.6% from last year to $3.7 billion. Adjusted earnings per share decreased from $1.81 last year to $1.18. These results translate to an adjusted tangible return on equity of 16.8%, which is modestly below the bank’s historical average. As we incorporate these results, we do not plan to materially alter our $46 fair value estimate for Synchrony.

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Price vs Fair Value

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SYF is trading at a 7% discount.
Price
$42.86
Fair Value
$78.00
Uncertainty
High
1-Star Price
$73.60
5-Star Price
$53.60
Economic Moat
Dgd
Capital Allocation
Btdrdrg

Bulls Say, Bears Say

Bulls

Synchrony enjoys long-term contracts with several successful digital retailers such as Amazon and PayPal. These partnerships provide Synchrony with a source of receivables growth even if its brick-and-mortar retailer partners struggle.

Bears

Losing Walmart and Gap were serious losses and may be a sign that Synchrony’s largest partners are becoming more demanding during negotiations.

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Trading Information

Previous Close Price
$42.86
Day Range
$42.70–45.16
52-Week Range
$26.59–45.16
Bid/Ask
$43.18 / $45.90
Market Cap
$18.32 Bil
Volume/Avg
9.9 Mil / 4.4 Mil

Key Statistics

Price/Earnings (Normalized)
8.69
Price/Sales
1.40
Dividend Yield (Trailing)
2.18%
Dividend Yield (Forward)
2.22%
Total Yield
8.33%

Company Profile

Synchrony Financial, originally a spinoff of GE Capital's retail financing business, is the largest provider of private-label credit cards in the United States by both outstanding receivables and purchasing volume. Synchrony partners with other firms to market its credit products in their physical stores as well as on their websites and mobile applications. Synchrony operates through three segments: retail card (private-label and co-branded general-purpose credit cards), payment solutions (promotional financing for large ticket purchases), and CareCredit (financing for elective healthcare procedures).
Sector
Financial Services
Industry
Credit Services
Stock Style Box
Mid Value
Total Number of Employees
20,000
Website
https://www.synchronyfinancial.com

Competitors

Valuation

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Metric
SYF
BFH
DFS
Price/Earnings (Normalized)
 8.693.0211.05
Price/Book Value
 1.390.602.28
Price/Sales
 1.400.411.91
Price/Cash Flow
 2.130.913.72
Price/Earnings
SYF
BFH
DFS

Financial Strength

Metric
SYF
BFH
DFS
Quick Ratio
 ———
Current Ratio
 ———
Interest Coverage
 ———
Quick Ratio
SYF
BFH
DFS

Profitability

Metric
SYF
BFH
DFS
Return on Assets (Normalized)
 2.06%3.39%2.12%
Return on Equity (Normalized)
 17.90%28.54%22.27%
Return on Invested Capital (Normalized)
 ———
Return on Assets
SYF
BFH
DFS
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