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Synchrony Financial’s (SYF - Free Report) second-quarter 2018 earnings per share of 92 cents surpassed the Zacks Consensus Estimate of 82 cents by 12.2%, mainly driven by interchange revenues and loan receivables growth. The bottom line also improved 51% year over year.
The company’s net interest income increased 3% to $3.7 billion in the second quarter, primarily owing to strong loan receivables growth.
However, other income was up by $6 million or 11% to $63 million, primarily owing to increased interchange revenues.
Loan receivables rose 5% year over year to $79 billion.
Deposits were $59 billion, up 12% from the year-ago quarter.
Purchase volume expanded 2% from the second quarter of 2017 to $34 billion.
Provision for loan loss decreased 3% year over year to $1.3 billion due to lower reserve build.
Total other expenses increased 7% to $975 million, primarily due to employee costs and other expenses.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 3% year over year, primarily driven by loan receivables growth. Loan receivables grew 3%, partially offset by underwriting refinements.
Purchase volume inched up 1% while average active accounts remained flat.
Payment Solutions
Interest and fees on loans rose 6% year over year on the back of period-end loan receivables growth. Loan receivables grew 8%, led by home furnishings and automotive.
Purchase volume expanded 9% while average active account rose 4%.
CareCredit
Interest and fees on loans increased 6% year over year, attributable to period-end loan receivables growth of 8%. Loan receivables growth was enhanced by dental and veterinary.
While purchase volume registered 8% growth, average active account reported a 5% rise.
Financial Position
Total assets as of Jun 30, 2018 were $99.1 billion, up 8.8% year over year.
Total borrowings as of Jun 30, 2018 were $21 billion, up 4.9% year over year.
The company’s balance sheet remained strong during the reported quarter with total liquidity of $28 billion or 28% of total assets.
Return on assets was 2.9% while return on equity was 19.4%.
Efficiency ratio was 31% compared with 30.1% in second-quarter 2017.
Share Repurchase and Dividend Update
In the second quarter, the company paid a quarterly common stock dividend of 21 cents per share and announced a plan to repurchase up to $2.2 billion of shares.
American Assets Trust, Inc. (AAT - Free Report) is set to release second-quarter 2018 earnings on Jul 31 and the consensus mark for the same stands at 51 cents per share, representing an improvement from 49 cents in the year-ago period. The stock carries a Zacks Rank of 3.
CyrusOne Inc is slated to release second-quarter 2018 earnings on Aug 1 and the Zacks Consensus Estimate for the same is pegged at 79 cents, reflecting a year-over-year rise of 2.6%. The stock is a Zacks #3 Ranked stock.
Apollo Investment Corporation is set to report second-quarter 2018 earnings on Aug 8. The Zacks Consensus Estimate for the same is 15 cents per share, flat with the year-ago results. The stock is a #3 Ranked player.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Image: Bigstock
Synchrony Financial's (SYF) Q2 Earnings Beat, Improve Y/Y
Synchrony Financial’s (SYF - Free Report) second-quarter 2018 earnings per share of 92 cents surpassed the Zacks Consensus Estimate of 82 cents by 12.2%, mainly driven by interchange revenues and loan receivables growth. The bottom line also improved 51% year over year.
Synchrony Financial Price and EPS Surprise
Synchrony Financial Price and EPS Surprise | Synchrony Financial Quote
Results in Detail
The company’s net interest income increased 3% to $3.7 billion in the second quarter, primarily owing to strong loan receivables growth.
However, other income was up by $6 million or 11% to $63 million, primarily owing to increased interchange revenues.
Loan receivables rose 5% year over year to $79 billion.
Deposits were $59 billion, up 12% from the year-ago quarter.
Purchase volume expanded 2% from the second quarter of 2017 to $34 billion.
Provision for loan loss decreased 3% year over year to $1.3 billion due to lower reserve build.
Total other expenses increased 7% to $975 million, primarily due to employee costs and other expenses.
Sales Platforms Update
Retail Card
Interest and fees on loans grew 3% year over year, primarily driven by loan receivables growth. Loan receivables grew 3%, partially offset by underwriting refinements.
Purchase volume inched up 1% while average active accounts remained flat.
Payment Solutions
Interest and fees on loans rose 6% year over year on the back of period-end loan receivables growth. Loan receivables grew 8%, led by home furnishings and automotive.
Purchase volume expanded 9% while average active account rose 4%.
CareCredit
Interest and fees on loans increased 6% year over year, attributable to period-end loan receivables growth of 8%. Loan receivables growth was enhanced by dental and veterinary.
While purchase volume registered 8% growth, average active account reported a 5% rise.
Financial Position
Total assets as of Jun 30, 2018 were $99.1 billion, up 8.8% year over year.
Total borrowings as of Jun 30, 2018 were $21 billion, up 4.9% year over year.
The company’s balance sheet remained strong during the reported quarter with total liquidity of $28 billion or 28% of total assets.
Return on assets was 2.9% while return on equity was 19.4%.
Efficiency ratio was 31% compared with 30.1% in second-quarter 2017.
Share Repurchase and Dividend Update
In the second quarter, the company paid a quarterly common stock dividend of 21 cents per share and announced a plan to repurchase up to $2.2 billion of shares.
Zacks Rank
Synchrony Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Players’ Releases From the Finance Sector
American Assets Trust, Inc. (AAT - Free Report) is set to release second-quarter 2018 earnings on Jul 31 and the consensus mark for the same stands at 51 cents per share, representing an improvement from 49 cents in the year-ago period. The stock carries a Zacks Rank of 3.
CyrusOne Inc is slated to release second-quarter 2018 earnings on Aug 1 and the Zacks Consensus Estimate for the same is pegged at 79 cents, reflecting a year-over-year rise of 2.6%. The stock is a Zacks #3 Ranked stock.
Apollo Investment Corporation is set to report second-quarter 2018 earnings on Aug 8. The Zacks Consensus Estimate for the same is 15 cents per share, flat with the year-ago results. The stock is a #3 Ranked player.
5 Medical Stocks to Buy Now
Zacks names 5 companies poised to ride a medical breakthrough that is targeting cures for leukemia, AIDS, muscular dystrophy, hemophilia and other conditions.
New products in this field are already generating substantial revenue and even more wondrous treatments are in the pipeline. Early investors could realize exceptional profits.
Click here to see the 5 stocks >>