This is why you should keep Synchrony Financial (SYF) now
Synchrony finance SYF will continue to benefit from multiple acquisitions and alliances, a powerful CareCredit platform, an advanced digital solution suite, cost containment efforts and a strong financial position.
Zack’s rank & price performance
Synchrony Financial currently has a Zacks Rank # 3 (Hold).
The stock is up 35.5% in a year, compared to industrial and financial rallies of 17% and 23.5%, respectively. The S&P 500 composite is up 29% over the stated timeframe.
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Impressive result surprise story
SYF’s earnings have exceeded estimates for each of the past four quarters, with an average surprise of 26.97%.
Solid growth prospects
The expected long-term earnings growth rate is 23%, better than the industry average of 17.2%.
Positive estimate revision
The Zacks consensus estimate for 2022 revenue has shifted 1.1% north over the past 60 days.
Robust return on equity
Synchrony Financial’s ROE for the past 12 months is 30.6%, still above the industry average of 22.3%. This reflects SYF’s efficiency in using its shareholders’ funds.
As a leading consumer financial services company, Synchrony Financial continues to make a number of acquisitions, partnerships, and expansions of alliances with established retailers and manufacturers to diversify its product offerings. Some of SYF’s notable renewals in 2021 include those with CITGO, Ashley HomeStore, 4 Wheel Parts, and Mattress Firm.
SYF has teamed up with digital leaders like PayPal and Amazon, which has enhanced its digital capabilities. A strong digital arm with improved consumer finance solutions will simplify point of sale financing and offer customers a seamless shopping experience.
Synchrony Financial has always been a priority to provide its customers with greater financial flexibility in making purchases. The company seeks to do the same by offering a diverse range of credit cards, commercial loan products, and consumer installment loans. Interest income from these products remains the main source of income for SYF. Particularly noteworthy is the company’s CareCredit platform.
The Synchrony Financial solution (CareCredit) has increased its focus on supplying healthcare systems. In December 2021, the platform announced its integration with Sycle, the practice management platform for the leading hearing aid industry. The integration serves a double purpose: hearing practices help save time and offer patients a financial option, which means that hearing aids can be easily obtained. A few months ago CareCredit formed an alliance with Epic App Orchard to expand the availability of the SYF solution to healthcare organizations. It’s worth noting that the CareCredit credit card is accepted by registered providers and health-focused retail locations totaling over 250,000 locations that aim to offer a wide range of health and wellness services.
In addition, Synchrony Financial has launched cost reduction initiatives that have successfully reduced its operating costs by 7% year over year in the first nine months of 2021. The initiative is expected to save around USD 210 million for SYF by the end of 2021.
A strong liquidity position enables Synchrony Financial to service its short-term debt. SYF has solid cash generating skills that enable it to make significant business investments and tactical capital operations through share buybacks and dividend payments. Recently, the board of directors approved a $ 1 billion increase in the existing share buyback plan, bringing the total amount of the authorization to $ 2.2 billion.
Shares to consider
Some better valued stocks in the financial sector are there Houlihan Lokey, Inc. HLI, Oportun finance company OPRT and Moody’s Corporation MCO. While Oportun Financial has a # 1 Zacks (Strong Buy) rating, Houlihan Lokey and Moody’s currently have a # 2 Zacks (Buy) rating. You can see the full list of current Zacks # 1 Rank stocks here.
Houlihan Lokey’s earnings have exceeded estimates for each of the past four quarters, with average surprise averaging 39.53%. The Zacks consensus estimate for HLI 2022 revenue has shifted 2.3% north over the past 30 days. HLI has a growth value of A.
Oportun Financial bottom line beat estimates for each of the past four quarters, the average surprise averaging 452.71%. The consensus mark for the result of OPRT 2022 shows a growth of 7.9% compared to the previous year. The estimates have also shifted 8.1% north over the past 60 days. OPRT has a growth value of B.
Moody’s earnings outperformed and missed estimates for three of the last four quarters, with the average surprise averaging 16.34%. The Zacks consensus estimate for MCO’s revenue in 2022 indicates a 3% increase from reported prior-year figure, while the same indicates a 7.9% increase in revenue. The consensus mark for MCO’s earnings for next year has shifted 0.4% north in the last 30 days.
Houlihan Lokey, Oportun Financial and Moody’s stocks are up 58.8%, 7.7% and 39.9%, respectively, in a year.
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