It has been about a month since the last earnings report for Synchrony (SYF Quick QuoteSYF - Free Report) . Shares have added about 8.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Synchrony due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Synchrony Financial's Q1 Earnings Beat, Surge Y/Y

Synchrony Financial delivered first-quarter 2021 earnings per share of $1.73, which outpaced the Zacks Consensus Estimate by 15.3%. Further, the bottom line improved 198.3% year over year on the back of lower expenses.

Results in Detail

The company’s net interest income plunged 12% year over year to $3.4 billion in the first quarter due to lower finance charges and late fees.

Its other income rose 35% year over year to $131 million owing to better investment income.

In the quarter under review, loan receivables declined 7% year over year to $76.9 billion.

Deposits were $62.7 billion, down 3% from the year-ago quarter.

Provision for credit losses declined 80% year over year to $334 million owing to reduced reserves and net charge-offs.

Total other expense decreased 7% year over year to $932 million, attributable to reduced operational losses and lower marketing and business development costs.

Sales Platforms Update
Retail Card

The company’s interest and fees on loans declined 16% year over year due to reduced loan receivables and lower yield.

Loan receivables were down 9%. While purchase volume improved 11%, the average active account fell 7%.

Payment Solutions

Interest and fees on loans dropped 11% year over year due to reduced late fees, finance charges and merchant accounts. Loan receivables dipped 1% year over year due to the impact of the pandemic.

Purchase volume expanded 3% while average active account fell 9%.

CareCredit

Interest and fees on loans decreased 7% year over year due to fall in merchant discount and lower late fees. Loan receivables were down 8% year over year.

While purchase volume was flat year over year, the average active accounts fell 11%.

Financial Position (as of Mar 31, 2021)

Total assets were $95.9 billion, down 0.1% from the 2020-end level.

Total borrowings were $15.1 billion, down 3.9% from the level at 2020 end.

The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $28 billion accounting for 29.2% of its total assets.

While return on assets was 4.3%, the return on equity was 31.8%.

Efficiency ratio was 36.1% in the first quarter of 2021.

Capital Deployment

During the quarter under consideration, Synchrony Financial returned $328 million worth of capital via common stock dividends.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates.

VGM Scores

At this time, Synchrony has a nice Growth Score of B, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Synchrony has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.