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.
Why Is Synchrony Financial (SYF) Up 1.9% Since the Last Earnings Report?
Read MoreHide Full Article
A month has gone by since the last earnings report for Synchrony Financial (SYF - Free Report) . Shares have added about 1.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Synchrony Financial Tops Q2 Earnings on Higher Revenues
Synchrony Financial’s second-quarter 2017 earnings per share of $0.61 surpassed the Zacks Consensus Estimate by 5.1%. The bottom line also grew 5.1 % from the year-ago quarter.
Results in Detail
The company’s net revenue, represented as net interest income, increased 13% to $3.64 billion, primarily due to strong loan receivables growth. Net interest income after retailer share arrangements increased 16%.
However, other income was down 31% to $57 million, largely driven by an increase in loyalty program expenses.
Loan receivables grew 11% year over year to $75 billion.
Deposits were $53 billion, up 14% from the last-year quarter.
Purchase volume increased 6% from the second-quarter of 2016
Provision for loan losses increased 3% year over year to $1,326 million, due to credit normalization and loan receivables growth.
Other expenses increased 8.6% to $911 million, primarily due to business growth.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 12% year over year, driven primarily by period-end loan receivables growth of 10%.
Purchase volume growth was 7% and average active account rose 3%.
Loan receivables growth was broad-based across partner programs.
Payment Solutions
Interest and fees on loans rose 14% year over year on the back of period-end loan receivables growth of 11%.
Purchase volume growth was 6%, adjusted to exclude the impact from the hhgregg bankruptcy, and 11% rise in average active account.
Loan receivables growth was led by home furnishings and automotive.
CareCredit
Interest and fees on loans increased 12% year over year, driven by period-end loan receivables growth of 11%.
Purchase volume growth was 11% and average active account growth was 10%.
Loan receivables growth was led by dental and veterinary.
Financial Position
Total Assets as on Jun 30, 2017 was $91.1 billion, up 10.6% year over year.
Total borrowings as on Jun 30, 2017, was $20.71 billion, up 7.3% year over year,
The company’s balance sheet remained strong during the quarter, with total liquidity of $22 billion, or 24% of total assets.
Return on assets was 2.2% and return on equity was 13.8%.
Efficiency ratio was 30.1% compared with 31.9% in the second quarter of 2016, driven by strong positive operating leverage.
Share Repurchase and Dividend Update
In the second quarter, the company announced a new capital plan under which the quarterly common stock dividend rose to $0.15 per share. It also announced approved share repurchases of up to $1.64 billion of Synchrony Financial common stock.
Business Update
During the second quarter, the company signed a new partnership with Zulily and renewed relationships with MEGA Group USA, City Furniture and National Veterinary Associates. It also launched new programs with Nissan and Infiniti.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter compared to two higher.
At this time, Synchrony Financial's stock has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Synchrony Financial (SYF) Up 1.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for Synchrony Financial (SYF - Free Report) . Shares have added about 1.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Synchrony Financial Tops Q2 Earnings on Higher Revenues
Synchrony Financial’s second-quarter 2017 earnings per share of $0.61 surpassed the Zacks Consensus Estimate by 5.1%. The bottom line also grew 5.1 % from the year-ago quarter.
Results in Detail
The company’s net revenue, represented as net interest income, increased 13% to $3.64 billion, primarily due to strong loan receivables growth. Net interest income after retailer share arrangements increased 16%.
However, other income was down 31% to $57 million, largely driven by an increase in loyalty program expenses.
Loan receivables grew 11% year over year to $75 billion.
Deposits were $53 billion, up 14% from the last-year quarter.
Purchase volume increased 6% from the second-quarter of 2016
Provision for loan losses increased 3% year over year to $1,326 million, due to credit normalization and loan receivables growth.
Other expenses increased 8.6% to $911 million, primarily due to business growth.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 12% year over year, driven primarily by period-end loan receivables growth of 10%.
Purchase volume growth was 7% and average active account rose 3%.
Loan receivables growth was broad-based across partner programs.
Payment Solutions
Interest and fees on loans rose 14% year over year on the back of period-end loan receivables growth of 11%.
Purchase volume growth was 6%, adjusted to exclude the impact from the hhgregg bankruptcy, and 11% rise in average active account.
Loan receivables growth was led by home furnishings and automotive.
CareCredit
Interest and fees on loans increased 12% year over year, driven by period-end loan receivables growth of 11%.
Purchase volume growth was 11% and average active account growth was 10%.
Loan receivables growth was led by dental and veterinary.
Financial Position
Total Assets as on Jun 30, 2017 was $91.1 billion, up 10.6% year over year.
Total borrowings as on Jun 30, 2017, was $20.71 billion, up 7.3% year over year,
The company’s balance sheet remained strong during the quarter, with total liquidity of $22 billion, or 24% of total assets.
Return on assets was 2.2% and return on equity was 13.8%.
Efficiency ratio was 30.1% compared with 31.9% in the second quarter of 2016, driven by strong positive operating leverage.
Share Repurchase and Dividend Update
In the second quarter, the company announced a new capital plan under which the quarterly common stock dividend rose to $0.15 per share. It also announced approved share repurchases of up to $1.64 billion of Synchrony Financial common stock.
Business Update
During the second quarter, the company signed a new partnership with Zulily and renewed relationships with MEGA Group USA, City Furniture and National Veterinary Associates. It also launched new programs with Nissan and Infiniti.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been four revisions lower for the current quarter compared to two higher.
Synchrony Financial Price and Consensus
Synchrony Financial Price and Consensus | Synchrony Financial Quote
VGM Scores
At this time, Synchrony Financial's stock has an average Growth Score of C, a grade with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is more suitable for value investors than those looking for growth and momentum.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. The stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.