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Synchrony Financial (SYF) Up 10% in 3 Months: Growth Ahead?
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Synchrony Financial’s (SYF - Free Report) shares have jumped 10.1% in the past three months, outperforming the 5.3% rise of the industry. Rising investment income, a strong CareCredit Platform and prudent strategic partnerships are driving the company.
Headquartered in Stamford, CT, Synchrony Financial offers a wide range of credit products and consumer installment loans for a diverse group of clients. It currently has a market cap of $13.7 billion.
Image Source: Zacks Investment Research
Can SYF Retain Momentum?
The answer is yes, and before we get into the details, let us show you where this Zacks Rank #3 (Hold) stock’s main estimates for 2023 stand.
The Zacks Consensus Estimate for 2023 earnings per share currently stands at $4.96, which increased by 2 cents over the past week. During this time, it has witnessed three upward estimate revisions against none in the opposite direction. SYF beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 5.7%.
The consensus mark for 2023 revenues is pegged at $16.9 billion, predicting 8% growth from the 2022 level, with the support of rising active accounts and loan receivables. Elevated benchmark rates are also likely to boost its results.
Our estimate for total period-end loan receivables for 2023 indicates a 10.6% year-over-year increase. Further, we expect average active accounts to increase almost 2% this year. The Health and Wellness platform is expected to be a major contributor to the upside. SYF’s focus on expanding the CareCredit brand is likely to support in this regard.
The company’s consistent efforts to strike new deals, create partnerships and expand old ones are expected to position the company for long-term growth. Even in the past few months, it created new partnerships and deals, including entities like Floor & Décor, Independence American Insurance Company, Nextech, Miracle-Ear and others. It also renewed tie-ups with companies like CCA Global Partners, JTV, The Container Store and others.
The list of Synchrony Financial’s partners is continually rising, with more than 30 partners being added or relationships being renewed in the first half of 2023 alone. These moves are likely to enhance and diversify SYF’s revenue base, which is crucial during volatile economic times.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
While the high interest rate environment is good for SYF’s investment income, it is likely to affect consumers’ spending levels. Also, losses are expected to build up on cards. The company estimates net charge-offs to average loans for 2023 to lie between 4.75 and 4.90%, which indicates a significant increase from the 2022 level of 3%. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
The Zacks Consensus Estimate for Globe Life’s 2023 earnings indicates a 28.7% year-over-year increase to $10.49 per share. It has witnessed five upward estimate revisions over the past month against no movement in the opposite direction. GL beat earnings estimates in all the last four quarters, with the average surprise being 2.2%.
The Zacks Consensus Estimate for Atlanticus’ 2023 earnings has improved 1.7% over the past month. It has witnessed one upward estimate revision during this time against no movement in the opposite direction. The consensus mark for ATLC’s current-year revenues signals a 16.1% year-over-year increase.
The Zacks Consensus Estimate for Ponce Financial’s 2023 bottom line suggests an 81.7% year-over-year improvement. It has witnessed one upward estimate revision in the past month against none in the opposite direction. PDLB beat earnings estimates in two of the last four quarters and missed twice.
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Synchrony Financial (SYF) Up 10% in 3 Months: Growth Ahead?
Synchrony Financial’s (SYF - Free Report) shares have jumped 10.1% in the past three months, outperforming the 5.3% rise of the industry. Rising investment income, a strong CareCredit Platform and prudent strategic partnerships are driving the company.
Headquartered in Stamford, CT, Synchrony Financial offers a wide range of credit products and consumer installment loans for a diverse group of clients. It currently has a market cap of $13.7 billion.
Image Source: Zacks Investment Research
Can SYF Retain Momentum?
The answer is yes, and before we get into the details, let us show you where this Zacks Rank #3 (Hold) stock’s main estimates for 2023 stand.
The Zacks Consensus Estimate for 2023 earnings per share currently stands at $4.96, which increased by 2 cents over the past week. During this time, it has witnessed three upward estimate revisions against none in the opposite direction. SYF beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 5.7%.
The consensus mark for 2023 revenues is pegged at $16.9 billion, predicting 8% growth from the 2022 level, with the support of rising active accounts and loan receivables. Elevated benchmark rates are also likely to boost its results.
Our estimate for total period-end loan receivables for 2023 indicates a 10.6% year-over-year increase. Further, we expect average active accounts to increase almost 2% this year. The Health and Wellness platform is expected to be a major contributor to the upside. SYF’s focus on expanding the CareCredit brand is likely to support in this regard.
The company’s consistent efforts to strike new deals, create partnerships and expand old ones are expected to position the company for long-term growth. Even in the past few months, it created new partnerships and deals, including entities like Floor & Décor, Independence American Insurance Company, Nextech, Miracle-Ear and others. It also renewed tie-ups with companies like CCA Global Partners, JTV, The Container Store and others.
The list of Synchrony Financial’s partners is continually rising, with more than 30 partners being added or relationships being renewed in the first half of 2023 alone. These moves are likely to enhance and diversify SYF’s revenue base, which is crucial during volatile economic times.
Risks
Despite the upside potential, there are a few factors that investors should keep an eye on.
While the high interest rate environment is good for SYF’s investment income, it is likely to affect consumers’ spending levels. Also, losses are expected to build up on cards. The company estimates net charge-offs to average loans for 2023 to lie between 4.75 and 4.90%, which indicates a significant increase from the 2022 level of 3%. Nevertheless, we believe that a systematic and strategic plan of action will drive long-term growth.
Key Picks
Investors interested in the broader finance space may look at players like Globe Life Inc. (GL - Free Report) , Atlanticus Holdings Corporation (ATLC - Free Report) and Ponce Financial Group, Inc. (PDLB - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Globe Life’s 2023 earnings indicates a 28.7% year-over-year increase to $10.49 per share. It has witnessed five upward estimate revisions over the past month against no movement in the opposite direction. GL beat earnings estimates in all the last four quarters, with the average surprise being 2.2%.
The Zacks Consensus Estimate for Atlanticus’ 2023 earnings has improved 1.7% over the past month. It has witnessed one upward estimate revision during this time against no movement in the opposite direction. The consensus mark for ATLC’s current-year revenues signals a 16.1% year-over-year increase.
The Zacks Consensus Estimate for Ponce Financial’s 2023 bottom line suggests an 81.7% year-over-year improvement. It has witnessed one upward estimate revision in the past month against none in the opposite direction. PDLB beat earnings estimates in two of the last four quarters and missed twice.