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Synchrony Financial’s (SYF - Free Report) fourth-quarter 2018 earnings per share of $1.09 surpassed the Zacks Consensus Estimate by 17.2%. The bottom line also improved 55.7% year over year on the back of PayPal Credit program acquisition and robust loan receivables growth.
Synchrony Financial Price, Consensus and EPS Surprise
The company’s net interest income increased 11% to $4.3 billion in the fourth quarter, primarily owing to strong loan receivables growth and purchase of PayPal Credit program.
Other income was up by $2 million to $64 million.
In the quarter under review, loan receivables rose 14% year over year to $93 billion.
Deposits were $64 billion, up 13% from the year-ago quarter.
Purchase volume expanded 10% from the fourth quarter of 2017 to $40 billion.
Provision for loan loss increased 7% year over year to $98 million on the back of PayPal Credit
program reserve. However, it was partially offset by moderating credit trends.
Total other expenses rose 11% to $1078 million, primarily due to PayPal Credit program acquisition and costs related to growth.
Sales Platforms Update
Retail Card
Interest and fees on loans of the company grew 14% year over year.
Loan receivables grew 16% while average active accounts climbed 9%, all driven by the company’s buyout of PayPal Credit program.
Payment Solutions
Interest and fees on loans rose 9% year over year on the back of period-end loan receivables growth. Loan receivables grew 9%, led by home furnishings and luxury.
Purchase volume expanded 8% while average active account rose 7%.
CareCredit
Interest and fees on loans increased 7% year over year, attributable to loan receivables growth. Loan receivables growth of 7% was enhanced by dental and veterinary.
While purchase volume registered 7% growth, average active account reported a 4% rise.
Full-Year Highlights
For 2018, net interest income of the company rose 7.3% to $16.1 billion. Earnings per share of the company improved 42.7% to $3.74.
Financial Position
Total assets as of Dec 31, 2018 were $106.7 billion, up 11.4% year over year.
Total borrowings as of Dec 31, 2018 were nearly $24 billion, up 14.9% year over year.
The company’s balance sheet remained strong during the reported quarter with total liquidity of $19 billion, or 18% of total assets.
Return on assets was 2.9% while return on equity was 21.5%.
Efficiency ratio was 30.4% compared with 30.3% in fourth-quarter 2017.
Discover Financial Services (DFS - Free Report) is set to release fourth-quarter earnings on Jan 24 and the consensus mark for the same stands at $2.09 per share, representing an improvement from $1.55 in the year-ago period. The stock carries a Zacks Rank of 3.
Cboe Global Markets, Inc. (CBOE - Free Report) is scheduled to release fourth-quarter earnings on Feb 2. The Zacks Consensus Estimate for the same is pegged at $1.35, reflecting a year-over-year rise of 55.2%. The stock has a Zacks Rank #2 (Buy).
Brown & Brown, Inc. (BRO - Free Report) is slated to announce fourth-quarter earnings on Jan 28. The consensus estimate for earnings is 27 cents, up from 25 cents in the prior-year quarter. The stock carries a Zacks Rank of 2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
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Synchrony Financial's (SYF) Q4 Earnings Beat, Increase Y/Y
Synchrony Financial’s (SYF - Free Report) fourth-quarter 2018 earnings per share of $1.09 surpassed the Zacks Consensus Estimate by 17.2%. The bottom line also improved 55.7% year over year on the back of PayPal Credit program acquisition and robust loan receivables growth.
Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial Price, Consensus and EPS Surprise | Synchrony Financial Quote
Results in Detail
The company’s net interest income increased 11% to $4.3 billion in the fourth quarter, primarily owing to strong loan receivables growth and purchase of PayPal Credit program.
Other income was up by $2 million to $64 million.
In the quarter under review, loan receivables rose 14% year over year to $93 billion.
Deposits were $64 billion, up 13% from the year-ago quarter.
Purchase volume expanded 10% from the fourth quarter of 2017 to $40 billion.
Provision for loan loss increased 7% year over year to $98 million on the back of PayPal Credit
program reserve. However, it was partially offset by moderating credit trends.
Total other expenses rose 11% to $1078 million, primarily due to PayPal Credit program acquisition and costs related to growth.
Sales Platforms Update
Retail Card
Interest and fees on loans of the company grew 14% year over year.
Loan receivables grew 16% while average active accounts climbed 9%, all driven by the company’s buyout of PayPal Credit program.
Payment Solutions
Interest and fees on loans rose 9% year over year on the back of period-end loan receivables growth. Loan receivables grew 9%, led by home furnishings and luxury.
Purchase volume expanded 8% while average active account rose 7%.
CareCredit
Interest and fees on loans increased 7% year over year, attributable to loan receivables growth. Loan receivables growth of 7% was enhanced by dental and veterinary.
While purchase volume registered 7% growth, average active account reported a 4% rise.
Full-Year Highlights
For 2018, net interest income of the company rose 7.3% to $16.1 billion. Earnings per share of the company improved 42.7% to $3.74.
Financial Position
Total assets as of Dec 31, 2018 were $106.7 billion, up 11.4% year over year.
Total borrowings as of Dec 31, 2018 were nearly $24 billion, up 14.9% year over year.
The company’s balance sheet remained strong during the reported quarter with total liquidity of $19 billion, or 18% of total assets.
Return on assets was 2.9% while return on equity was 21.5%.
Efficiency ratio was 30.4% compared with 30.3% in fourth-quarter 2017.
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.
Peer Releases From Finance Sector
Discover Financial Services (DFS - Free Report) is set to release fourth-quarter earnings on Jan 24 and the consensus mark for the same stands at $2.09 per share, representing an improvement from $1.55 in the year-ago period. The stock carries a Zacks Rank of 3.
Cboe Global Markets, Inc. (CBOE - Free Report) is scheduled to release fourth-quarter earnings on Feb 2. The Zacks Consensus Estimate for the same is pegged at $1.35, reflecting a year-over-year rise of 55.2%. The stock has a Zacks Rank #2 (Buy).
Brown & Brown, Inc. (BRO - Free Report) is slated to announce fourth-quarter earnings on Jan 28. The consensus estimate for earnings is 27 cents, up from 25 cents in the prior-year quarter. The stock carries a Zacks Rank of 2.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, wouldn't you like to know about our 10 finest buy-and-holds for the year?
From more than 4,000 companies covered by the Zacks Rank, these 10 were picked by a process that consistently beats the market. Even during 2018 while the market dropped -5.2%, our Top 10s were up well into double-digits. And during bullish 2012 – 2017, they soared far above the market's +126.3%, reaching +181.9%.
This year, the portfolio features a player that thrives on volatility, an AI comer, and a dynamic tech company that helps doctors deliver better patient outcomes at lower costs.
See Stocks Today >>