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What's in Store for Synchrony Financial's (SYF) Q1 Earnings?

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Synchrony Financial (SYF - Free Report) will release first-quarter 2021 results on Apr 27, before the market opens.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $1.50 per share, suggesting a 158.6% hike from the year-ago period’s reported figure, mainly owing to lower expenses.

Synchrony Financial 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 reduced expenses.

Key Factors to Impact Q1 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 a 7.6% downfall from the year-earlier quarter’s reported number.

The consensus mark for interest income suggests a decline of 7.6% from the year-ago quarter’s reported figure. This is likely to have occurred due to low interest rate environment.

However, new account volume might have seen a significant rise from the trends that have continued since last September. Further, the company is expected to have benefited from a 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 4.5% from the year-earlier quarter’s reported number.

On its earnings call, management announced the authorization of $1.6-billion share repurchases for 2021 beginning the first quarter.

Synchrony Financial is expected to have witnessed decreased expenses owing to reduced purchase volume and accounts, employee costs and operational losses, which in turn, might have aided its margins.

The Zacks Consensus Estimate for the efficiency ratio is 35.59%, suggesting a dip from the prior-year period’s reported figure of 32.70%. The ratio is likely to have been affected by decreasing interest and fee yield.

The consensus mark for loan receivables is $79.5 billion, implying a 3.7% slip from the year-ago reported figure.

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 -0.20%. 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 #2.

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:

Virtu Financial, Inc. (VIRT - Free Report) has an Earnings ESP of +3.26% and a Zacks Rank #2, currently.  

Moodys Corporation (MCO - Free Report) has an Earnings ESP of +2.39% and a Zacks Rank of 3 at present.

Manulife Financial Corp. (MFC - Free Report) has an Earnings ESP of +3.86% and is currently Zacks #2 Ranked.

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