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Are Investors Undervaluing Synchrony (SYF) Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Synchrony (SYF - Free Report) is a stock many investors are watching right now. SYF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 7.80, which compares to its industry's average of 14.45. Over the past year, SYF's Forward P/E has been as high as 12.30 and as low as 4.89, with a median of 9.88.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SYF has a P/S ratio of 1.46. This compares to its industry's average P/S of 2.61.

These are only a few of the key metrics included in Synchrony's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SYF looks like an impressive value stock at the moment.


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