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Synchrony Financial (SYF) to Post Q2 Earnings: What to Expect

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Synchrony Financial  (SYF - Free Report) will release second-quarter 2021 results on Jul 20, before the market opens.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $1.51 per share. The year-ago quarter’s earnings were delivered at 6 cents per share. The Zacks Consensus Estimate for the top line stands at $3.4 billion, indicating a 1% downfall from the year-earlier quarter’s reported number.

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

Key Factors to Impact Q2 Results

The company is likely to have witnessed lower interest and fees on loans from its Retail Card, Payment Solutions and CareCredit segments. It is expected to have consistently gained from its digital sales volume.

Net interest income of the company is likely to have decreased due to lower finance charges and late fees.

The company is expected to have witnessed a decline in expenses in the to-be-reported quarter owing to reduced purchase volume and accounts, employee costs and operational losses, which in turn, might have aided its margins. This decrease is expected to have been supported by improved operational losses, and lower marketing and business development costs.

On its last earnings call, the company expected current delinquencies to result in lower net charge-offs. The consensus mark for the same stands at 3.75, indicating a decline from the year-ago quarter’s average of 5.35.
New account volume might have seen a significant rise over the last few quarters. The company is expected to have benefited from a better purchase volume as the economy is bouncing back and people are spending more now.

It is expected to have continued with its share buyback policy in the second quarter.

The efficiency ratio has been suffering muted revenues for a while now due to reduced receivables, and lower interest and fee yield. However, it is expected to be better in the second quarter. The Zacks Consensus Estimate for the efficiency ratio is pegged at 36.7%, suggesting a rise from the prior-year period’s reported figure of 36.3%.

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 -1.10%. 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 but 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:

Discover Financial Services (DFS - Free Report) has an Earnings ESP of +5.16% and a Zacks Rank #3, currently.  

Moodys Corporation (MCO - Free Report) has an Earnings ESP of +3.50% and a Zacks Rank of 3 at present.

Principal Financial Group, Inc. (PFG - Free Report) has an Earnings ESP of +0.66% and is currently Zacks #3 Ranked.