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Synchrony Financial (SYF) Q4 Earnings Beat Estimates, Up Y/Y
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Synchrony Financial (SYF - Free Report) delivered fourth-quarter 2020 earnings per share of $1.24, which outpaced the Zacks Consensus Estimate by 36.3%. Further, the bottom line improved 7.8% year over year on the back of lower expenses.
Results in Detail
The company’s net interest income plunged 9% year over year to $3.7 billion in the fourth quarter due to the impact of COVID-19 pandemic.
Its other income fell 21% year over year to $82 million due to increased loyalty program costs.
In the quarter under review, loan receivables declined 6% year over year.
Deposits were $62.8 billion, down 4% from the year-ago quarter.
Provision for credit losses declined 32% year over year to $750 million due to reduced net charge-offs, partly offset by a reserve increase of $119 million.
Total other expense slid 7% year over year to $1 billion attributable to reduced purchase volume and accounts, employee costs, and operational losses.
Synchrony Financial Price, Consensus and EPS Surprise
The company’s interest and fees on loans declined 13% year over year due to reduced loan receivables and impact of the pandemic.
Loan receivables were down 8% on account of the coronavirus impact, partly offset by growth in digital partners. While purchase volume inched up 1%, the average active account fell 10%.
Payment Solutions
Interest and fees on loans dropped 9% year over year due to reduced yields on loan receivables. Loan receivables dipped 2% year over year due to the impact of the pandemic.
Purchase volume contracted 7%, while average active account fell 9%.
CareCredit
Interest and fees on loans decreased 4% year over year due to fall in merchant discount stemming from reduced purchase volume. Loan receivables were down 7% year over year on account of the coronavirus impact.
While purchase volume decreased 6%, the average active accounts fell 10%.
Financial Position
Total assets as of Dec 31, 2020 were $95.9 billion, down 8.5% year over year.
Total borrowings as of Dec 31, 2020 were $15.8 billion, down 20.6% from the year-ago quarter.
The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $23.7 billion, accounting for 24.7% of total assets.
While return on assets was 3.1%, the return on equity was 23.6%.
Efficiency ratio was 37.1% in fourth-quarter 2020.
Capital Deployment
During the quarter under consideration, Synchrony Financial returned $128 million in capital via common stock dividends.
Recently, the company’s board of directors authorized a share repurchase program of up to $1.6 billion. Beginning in first-quarter 2021, the program runs through Dec 31, 2021.
Full-Year Update
For 2020, the company’s earnings per share of $2.27 surpassed the Zacks Consensus Estimate of $2.02. However, the bottom line plunged 59.2% year over year.
While net interest income for the year declined 14.3% year over year to $14.4 billion, other income improved 9.2% year over year to $405 million. Total other expense fell 4.5% year over year to $4.1 billion.
Of the finance sector players that reported fourth-quarter results so far, the bottom line of American Express Company (AXP - Free Report) and Discover Financial Services (DFS - Free Report) beat the Zacks Consensus Estimate.
Upcoming Release
Here is a company worth considering from the finance sector as our model shows that this has the right combination of elements to beat on earnings this reporting cycle:
Moody's Corporation (MCO - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #3 presently.
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Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Synchrony Financial (SYF) Q4 Earnings Beat Estimates, Up Y/Y
Synchrony Financial (SYF - Free Report) delivered fourth-quarter 2020 earnings per share of $1.24, which outpaced the Zacks Consensus Estimate by 36.3%. Further, the bottom line improved 7.8% year over year on the back of lower expenses.
Results in Detail
The company’s net interest income plunged 9% year over year to $3.7 billion in the fourth quarter due to the impact of COVID-19 pandemic.
Its other income fell 21% year over year to $82 million due to increased loyalty program costs.
In the quarter under review, loan receivables declined 6% year over year.
Deposits were $62.8 billion, down 4% from the year-ago quarter.
Provision for credit losses declined 32% year over year to $750 million due to reduced net charge-offs, partly offset by a reserve increase of $119 million.
Total other expense slid 7% year over year to $1 billion attributable to reduced purchase volume and accounts, employee costs, and operational losses.
Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote
Sales Platforms Update
Retail Card
The company’s interest and fees on loans declined 13% year over year due to reduced loan receivables and impact of the pandemic.
Loan receivables were down 8% on account of the coronavirus impact, partly offset by growth in digital partners. While purchase volume inched up 1%, the average active account fell 10%.
Payment Solutions
Interest and fees on loans dropped 9% year over year due to reduced yields on loan receivables. Loan receivables dipped 2% year over year due to the impact of the pandemic.
Purchase volume contracted 7%, while average active account fell 9%.
CareCredit
Interest and fees on loans decreased 4% year over year due to fall in merchant discount stemming from reduced purchase volume. Loan receivables were down 7% year over year on account of the coronavirus impact.
While purchase volume decreased 6%, the average active accounts fell 10%.
Financial Position
Total assets as of Dec 31, 2020 were $95.9 billion, down 8.5% year over year.
Total borrowings as of Dec 31, 2020 were $15.8 billion, down 20.6% from the year-ago quarter.
The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $23.7 billion, accounting for 24.7% of total assets.
While return on assets was 3.1%, the return on equity was 23.6%.
Efficiency ratio was 37.1% in fourth-quarter 2020.
Capital Deployment
During the quarter under consideration, Synchrony Financial returned $128 million in capital via common stock dividends.
Recently, the company’s board of directors authorized a share repurchase program of up to $1.6 billion. Beginning in first-quarter 2021, the program runs through Dec 31, 2021.
Full-Year Update
For 2020, the company’s earnings per share of $2.27 surpassed the Zacks Consensus Estimate of $2.02. However, the bottom line plunged 59.2% year over year.
While net interest income for the year declined 14.3% year over year to $14.4 billion, other income improved 9.2% year over year to $405 million. Total other expense fell 4.5% year over year to $4.1 billion.
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.
Other Finance Sector Releases
Of the finance sector players that reported fourth-quarter results so far, the bottom line of American Express Company (AXP - Free Report) and Discover Financial Services (DFS - Free Report) beat the Zacks Consensus Estimate.
Upcoming Release
Here is a company worth considering from the finance sector as our model shows that this has the right combination of elements to beat on earnings this reporting cycle:
Moody's Corporation (MCO - Free Report) has an Earnings ESP of +2.74% and a Zacks Rank #3 presently.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>