Should Value Investors Buy Synchrony Financial (SYF) Stock?

SYF

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Synchrony Financial (SYF - Free Report) is a stock many investors are watching right now. SYF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 5.65 right now. For comparison, its industry sports an average P/E of 11.18. Over the last 12 months, SYF's Forward P/E has been as high as 7.56 and as low as 5.36, with a median of 6.48.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SYF has a P/S ratio of 0.65. This compares to its industry's average P/S of 1.45.

These are only a few of the key metrics included in Synchrony Financial's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SYF looks like an impressive value stock at the moment.

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