Q4 Earnings Preview for Synchrony Financial (SYF)

in EARNINGS/INVESTING IDEAS by

Synchrony Financial (NYSE:SYF) is scheduled to report Q4 earnings results before the market opens on Friday, January 24, 2020. The conference call with management is scheduled for the same morning at 7:30 a.m. ET.

The company is expected to report earnings of $1.07/share on revenue of $3.167 billion. The consensus earnings per share (EPS) of $1.07/share is based on a poll of 15 analysts and represents a decline of -1.8% over the same quarter last year when the company reported earnings of $1.09/share.

The revenue forecast of $3.167 billion based on a poll of 9 analysts implies a year-over-year (YoY) decline of -10.6%. Last year the company reported $3.542 billion in revenue for the quarter.

Expected to report EPS decline of -$0.02/share for Q4, 2019
Metric Expected Prior Year YoY Change
Revenue $3,167.00 $3,542.00 -10.6%
EPS $1.07 $1.09 -1.8%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Synchrony for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $1.14 $1.22 7.5% Beat
Q2, 2019 $0.96 $0.97 1.3% Beat
Q1, 2019 $0.89 $1 12.9% Beat
Q4, 2018 $0.92 $1.09 18.0% Beat
Q3, 2018 $0.81 $0.91 11.7% Beat
Q2, 2018 $0.83 $0.92 10.8% Beat
Q1, 2018 $0.76 $0.83 9.2% Beat
Q4, 2017 $0.64 $0.70 9.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report.

After the last earnings report for the period ending September 30, 2019, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-10-18 $33.98 $34.29 0.9% Increase
2019-07-19 $36.09 $35.05 -2.9% Decline
2019-04-18 $33.24 $33.34 0.3% Increase
2019-01-23 $26.55 $29.81 12.3% Increase

Fundamentals And Technical Analysis

Synchrony Financial is currently trading at $35.66/share, down -0.3% for the day. The company is trading at approximately 93.4% of its 52-week high of $38.18/share. The company’s stock price is up 4.0% since the last earnings report and up 0.7% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 44.94 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

NYSE:SYF Stock Price Chart Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 6.1x and a forward P/E multiple of 8.0x. Synchrony’s current share price also implies a price-to-book (P/B) multiple of 1.5x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q3
Period End Date September 30, 2019
Stock Price (Current) $35.66
P/E Ratio 6.1x
P/E Ratio (Fwd) 8.0x
PEG Ratio -1.4
Total Debt to Capital (%) 46.8%
Levered Free Cash Flow $9.23 billion
Market Capitalization $23.108 billion

Source: Finbox

Company Profile: Synchrony Financial

Synchrony Financial is a large-cap stock with a market capitalization of $23.108 billion. The company operates in the Financial sector and the Consumer Finance industry.

Synchrony operates as a consumer financial services company in the United States. The company offers private label credit cards, dual cards, general purpose co-branded credit cards, and small and medium-sized business credit products; and promotional financing for consumer purchases, such as private label credit cards and installment loans.

Synchrony also provides promotional financing to consumers for health, veterinary and personal care procedures, and services and products, such as dental, vision, audiology, and cosmetic; debt cancellation products; and deposit products, including certificates of deposit, individual retirement accounts, money market accounts, and savings accounts to retail and commercial customers, as well as accepts deposits through third-party securities brokerage firms.

The company offers its credit products through programs established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations, and healthcare service providers; and deposit products through various channels, such as digital and print.

Synchrony Financial was incorporated in 2003 and is headquartered in Stamford, Connecticut.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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