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.
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 UpdateRetail 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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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.
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 >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Get the latest research report on DFS - FREE
Get the latest research report on CBOE - FREE
Get the latest research report on BRO - FREE
Get the latest research report on SYF - FREE