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What's in Store for Synchrony Financial (SYF) Q4 Earnings?

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Synchrony Financial (SYF - Free Report) will release fourth-quarter 2020 results on Jan 29, before the market opens.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 91 cents per share, suggesting a 17.3% drop from the year-ago period’s reported figure, mainly due to COVID-led muted revenues.

In the last reported quarter, the company’s earnings per share of 72 cents missed the Zacks Consensus Estimate by 13.3%. Further, the bottom line plunged 41% year over year due to depressed revenues.

Key Factors to Impact Q4 Results

The company is likely to have witnessed lower interest and fees on loans from its Retail Card, Payment Solutions and CareCredit segments. The Zacks Consensus Estimate for the top line is pegged at $3.5 billion, indicating an 11.8% downfall from the year-earlier quarter’s reported number.

However, new account volume might have seen a significant rise from the trends that have continued since last September. Further, the company might have benefited from better purchase volume as the economy is bouncing back and people are spending more now. The consensus mark for purchase volume indicates an upside of 24.3% from the year-ago quarter’s reported figure.

Nonetheless, Synchrony Financial is expected to have endured elevated expenses due to operational losses and certain expenditures related to its response to COVID-19.  

The Zacks Consensus Estimate for efficiency ratio is 34.7%, suggesting a dip from the year-ago period’s reported figure of 34.8%.

However, the company is expected to have consistently gained from its digital sales volume.

What the Quantitative Model Predicts

Our proven model doesn’t predict an earnings beat for Synchrony Financial this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise, which is not the case here. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Synchrony Financial has an Earnings ESP of -4.35%. This is because the Most Accurate Estimate is pegged at 87 cents, lower than the Zacks Consensus Estimate of 91 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Synchrony Financial Price and EPS Surprise

Synchrony Financial Price and EPS Surprise

Synchrony Financial price-eps-surprise | Synchrony Financial Quote

Zacks Rank: Synchrony Financial currently carries a Zacks Rank #3 (Hold).
However, a negative Earnings ESP in the combination leaves surprise prediction inconclusive.

Stocks to Consider

Some stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Sun Life Financial Inc. (SLF - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #2, currently.  

Moodys Corporation (MCO - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank of 3 at present.

Manulife Financial Corp. (MFC - Free Report) has an Earnings ESP of +0.95% and is currently Zacks #2 Ranked.

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