We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Can Synchrony (SYF) Q3 Earnings Beat on Higher Purchase Volume?
Read MoreHide Full Article
Synchrony Financial (SYF - Free Report) is set to continue its earnings beat streak this earnings season. The third-quarter 2022 results are slated to be released on Oct 25, before the opening bell.
The consumer financial services company reported adjusted earnings of $1.60 per share for the last quarter, beating the Zacks Consensus Estimate of $1.43 on the back of solid growth in average active accounts and a higher purchase volume. It also gained from solid contributions from all sales platforms. The results benefited from increased interest and fees on loans. Yet, the results were partially offset by steep expenses.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate of $1.45 for third-quarter earnings per share has witnessed three upward revisions and one downward movement in the past 60 days. However, the estimate indicates a 13.2% decrease from the year-ago reported figure. Our estimate suggests earnings to be $1.48 per share in the third quarter.
The Zacks Consensus Estimate for third-quarter net investment income is pegged at $3.8 billion, suggesting a jump of 4.8% from the year-ago reported figure. We expect third-quarter net investment income to witness a 3.7% year-over-year increase.
Synchrony beat earnings estimates in each of the trailing four quarters, delivering an average surprise of 9.4%. This is depicted in the graph below.
Our proven model predicts an earnings beat for Synchrony this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +11.33%. The Most Accurate Estimate is pegged at $1.62 per share, higher than the Zacks Consensus Estimate of $1.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Synchrony currently holds a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
Synchrony Financial is expected to have benefited from a better purchase volume as the economy is growing and people are spending more. Our estimate for total purchase volumes for the third quarter indicates an improvement of 14.2% year over year. SYF is expected to have consistently gained from digital sales volume in the to-be-reported quarter.
The Zacks Consensus Estimate for the efficiency ratio is pegged at 38.46%, suggesting a downside from the prior-year reported figure of 38.70%.
We expect SYF’s interest and fees on loans for the third quarter to increase to more than $4 billion from $3.9 billion a year ago. The financial service provider is expected to have witnessed an increase in average interest-earnings assets. The consensus estimate indicates a 5.4% increase in the metric from the year-ago period, while our estimate suggests a 3% jump.
We expect the net interest margin to rise to 15.6% in the third quarter from 15.5% a year ago. Also, our estimate and the Zacks Consensus Estimate suggest a rise of 0.9% year over year in average active accounts in the Home & Auto platform in the third quarter. The net charge-offs are also expected to have declined in the quarter in review.
While the abovementioned factors are likely to have set the company up for an earnings beat in the third quarter, some elements might partially offset the positives, leading to a year-over-year decline in earnings. The company is expected to have incurred high marketing and business development costs in the third quarter.
Our estimate suggests an 18.3% rise in total non-interest expenses, while professional fees and employee costs are expected to increase 10.3% and 12%, respectively.
Other Stocks That Warrant a Look
Here are some other companies from the broader financespace that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
The Zacks Consensus Estimate for Axos Financial’s bottom line for the to-be-reported quarter is pegged at $1.13 per share, implying a 9.7% improvement from the year-ago figure. AX beat earnings estimates in each of the past four quarters, with an average surprise of 10.1%.
Premier Financial Corp. (PFC - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Premier Financial’s bottom line for the to-be-reported quarter is pegged at 80 cents per share, implying a 5.3% improvement from the year-ago figure. The estimates remained stable over the past week.
American Express Company (AXP - Free Report) has an Earnings ESP of +3.13% and a Zacks Rank of 3.
The Zacks Consensus Estimate for American Express’ bottom line for the to-be-reported quarter is pegged at $2.39 per share, indicating 5.3% year-over-year growth. AXP beat earnings estimates in each of the past four quarters, with an average surprise of 17.7%.
Image: Bigstock
Can Synchrony (SYF) Q3 Earnings Beat on Higher Purchase Volume?
Synchrony Financial (SYF - Free Report) is set to continue its earnings beat streak this earnings season. The third-quarter 2022 results are slated to be released on Oct 25, before the opening bell.
The consumer financial services company reported adjusted earnings of $1.60 per share for the last quarter, beating the Zacks Consensus Estimate of $1.43 on the back of solid growth in average active accounts and a higher purchase volume. It also gained from solid contributions from all sales platforms. The results benefited from increased interest and fees on loans. Yet, the results were partially offset by steep expenses.
Now, let’s see how things have shaped up prior to the third-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate of $1.45 for third-quarter earnings per share has witnessed three upward revisions and one downward movement in the past 60 days. However, the estimate indicates a 13.2% decrease from the year-ago reported figure. Our estimate suggests earnings to be $1.48 per share in the third quarter.
The Zacks Consensus Estimate for third-quarter net investment income is pegged at $3.8 billion, suggesting a jump of 4.8% from the year-ago reported figure. We expect third-quarter net investment income to witness a 3.7% year-over-year increase.
Synchrony beat earnings estimates in each of the trailing four quarters, delivering an average surprise of 9.4%. This is depicted in the graph below.
Synchrony Financial Price and EPS Surprise
Synchrony Financial price-eps-surprise | Synchrony Financial Quote
What the Quantitative Model Suggests
Our proven model predicts an earnings beat for Synchrony this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Earnings ESP for the company is currently +11.33%. The Most Accurate Estimate is pegged at $1.62 per share, higher than the Zacks Consensus Estimate of $1.45. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Synchrony currently holds a Zacks Rank #3.
Factors Driving Better-Than-Expected Earnings
Synchrony Financial is expected to have benefited from a better purchase volume as the economy is growing and people are spending more. Our estimate for total purchase volumes for the third quarter indicates an improvement of 14.2% year over year. SYF is expected to have consistently gained from digital sales volume in the to-be-reported quarter.
The Zacks Consensus Estimate for the efficiency ratio is pegged at 38.46%, suggesting a downside from the prior-year reported figure of 38.70%.
We expect SYF’s interest and fees on loans for the third quarter to increase to more than $4 billion from $3.9 billion a year ago. The financial service provider is expected to have witnessed an increase in average interest-earnings assets. The consensus estimate indicates a 5.4% increase in the metric from the year-ago period, while our estimate suggests a 3% jump.
We expect the net interest margin to rise to 15.6% in the third quarter from 15.5% a year ago. Also, our estimate and the Zacks Consensus Estimate suggest a rise of 0.9% year over year in average active accounts in the Home & Auto platform in the third quarter. The net charge-offs are also expected to have declined in the quarter in review.
While the abovementioned factors are likely to have set the company up for an earnings beat in the third quarter, some elements might partially offset the positives, leading to a year-over-year decline in earnings. The company is expected to have incurred high marketing and business development costs in the third quarter.
Our estimate suggests an 18.3% rise in total non-interest expenses, while professional fees and employee costs are expected to increase 10.3% and 12%, respectively.
Other Stocks That Warrant a Look
Here are some other companies from the broader financespace that you may also want to consider, as our model shows that these too have the right combination of elements to post an earnings beat this time around:
Axos Financial, Inc. (AX - Free Report) has an Earnings ESP of +4.06% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Axos Financial’s bottom line for the to-be-reported quarter is pegged at $1.13 per share, implying a 9.7% improvement from the year-ago figure. AX beat earnings estimates in each of the past four quarters, with an average surprise of 10.1%.
Premier Financial Corp. (PFC - Free Report) has an Earnings ESP of +1.67% and a Zacks Rank of 2.
The Zacks Consensus Estimate for Premier Financial’s bottom line for the to-be-reported quarter is pegged at 80 cents per share, implying a 5.3% improvement from the year-ago figure. The estimates remained stable over the past week.
American Express Company (AXP - Free Report) has an Earnings ESP of +3.13% and a Zacks Rank of 3.
The Zacks Consensus Estimate for American Express’ bottom line for the to-be-reported quarter is pegged at $2.39 per share, indicating 5.3% year-over-year growth. AXP beat earnings estimates in each of the past four quarters, with an average surprise of 17.7%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.