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Why Should You Hold Synchrony Financial in Your Portfolio?
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Synchrony Financial (SYF - Free Report) is well-poised for growth on the back of its solid segmental contributions and inorganic growth strategies.
Over the past seven days, the company has witnessed its 2020 earnings estimate move 13.2% north, which proves investors’ optimism on the stock.
The company is expected to make progress, evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
This leading provider of private label credit cards in the United States has seen revenue growth since 2013 on the back of its rising interest income. In fact, the company’s total interest income witnessed a five-year (2014-2019) CAGR of 9.3%. Although the same suffered to some extent in the first six months of 2020, we expect the metric to bounce back on investments in the CareCredit network expansion, strategic initiatives and boosting the company’s digital capabilities.
Synchrony Financial has been making concerted efforts in effecting acquisitions to drive business growth. It has been successful in revising several collaborations over the last few quarters as well. The company added around 4000 new merchants in the second quarter and expanded several relationships. It also executed a successful launch of the Verizon program. All these measures aid its competitive edge.
The company’s Retail Card segment is a leading provider of private label credit cards and Dual Cards, general purpose co-branded credit cards, and small and medium-sized business credit products. Retail Card interest and fees on loans have been rising over the past many years on the back of purchase volume growth and a period-end loan receivables increase. Although contribution from this segment declined to some extent in the first half of 2020, we expect the same to rebound going forward.
The company’s CareCredit platform also holds ample potential. In the second quarter, the segment added more than 2000 new provider locations to its network. This segmental strength bodes well on the back of its current and new relationships, new programs, etc.
However, purchase volume for the first six months contracted 10.7% from the year-ago quarter’s figure due to controlled purchases. This was because of government restrictions on travel, entertainment, events, etc. and closure of several non-essential retail stores. Although the levels improved in May and June, the same poses a challenge to Synchrony Financial.
Price Performance
Shares of this company have soared 85.5% in six months’ time, outperforming its industry’s growth of 24.9%.
Companies in the same space, such as Oaktree Specialty Lending Corp. (OCSL - Free Report) , Houlihan Lokey Inc. (HLI - Free Report) and Alliance Data Systems Corporation have also gained 32.1%, 14.4% and 34.6%, respectively, in the same time frame.
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Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
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Why Should You Hold Synchrony Financial in Your Portfolio?
Synchrony Financial (SYF - Free Report) is well-poised for growth on the back of its solid segmental contributions and inorganic growth strategies.
Over the past seven days, the company has witnessed its 2020 earnings estimate move 13.2% north, which proves investors’ optimism on the stock.
The company is expected to make progress, evident from its favorable VGM Score of A. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Here we discuss the reasons for retaining this currently Zacks Rank #3 (Hold) company in one’s investment portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
This leading provider of private label credit cards in the United States has seen revenue growth since 2013 on the back of its rising interest income. In fact, the company’s total interest income witnessed a five-year (2014-2019) CAGR of 9.3%. Although the same suffered to some extent in the first six months of 2020, we expect the metric to bounce back on investments in the CareCredit network expansion, strategic initiatives and boosting the company’s digital capabilities.
Synchrony Financial has been making concerted efforts in effecting acquisitions to drive business growth. It has been successful in revising several collaborations over the last few quarters as well. The company added around 4000 new merchants in the second quarter and expanded several relationships. It also executed a successful launch of the Verizon program. All these measures aid its competitive edge.
The company’s Retail Card segment is a leading provider of private label credit cards and Dual Cards, general purpose co-branded credit cards, and small and medium-sized business credit products. Retail Card interest and fees on loans have been rising over the past many years on the back of purchase volume growth and a period-end loan receivables increase. Although contribution from this segment declined to some extent in the first half of 2020, we expect the same to rebound going forward.
The company’s CareCredit platform also holds ample potential. In the second quarter, the segment added more than 2000 new provider locations to its network. This segmental strength bodes well on the back of its current and new relationships, new programs, etc.
However, purchase volume for the first six months contracted 10.7% from the year-ago quarter’s figure due to controlled purchases. This was because of government restrictions on travel, entertainment, events, etc. and closure of several non-essential retail stores. Although the levels improved in May and June, the same poses a challenge to Synchrony Financial.
Price Performance
Shares of this company have soared 85.5% in six months’ time, outperforming its industry’s growth of 24.9%.
Companies in the same space, such as Oaktree Specialty Lending Corp. (OCSL - Free Report) , Houlihan Lokey Inc. (HLI - Free Report) and Alliance Data Systems Corporation have also gained 32.1%, 14.4% and 34.6%, respectively, in the same time frame.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>