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Time to Buy Ally or Synchrony Financial Stock for Higher Highs?
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Much attention will be on the financial sector with JP Morgan (JPM - Free Report) , Bank of America (BAC - Free Report) , and other big banks set to kick-start the Q4 earnings season when they report their quarterly results next Friday.
With that being said several consumer lending stocks have been bright spots in the financial sector as well with Ally Financial (ALLY - Free Report) and Synchrony Financial (SYF - Free Report) standing out in particular.
Ally and Synchrony are hovering near their 52-week highs and will be reporting Q4 results later in the month on January 19 and 23 respectively. Leading up to their reports let’s see if now is a good time to buy Ally or Synchrony stock for higher highs.
Recent Performance Overview
As diversified financial service providers, Ally offers a broad range of financial products and services primarily to the auto industry while Synchrony provides a wide range of credit products through a diverse group of national and regional retailers, local merchants, and manufacturers among others.
Over the last year, Ally’s stock performance has been strong with shares up +36% to top the S&P 500’s +24% while Synchrony’s +17% has been very respectable as well. Notably, Synchrony hit 52-week highs of over $38 a share today and Ally is just at the cusp of its highs of $35.78 a share seen last February.
Image Source: Zacks Investment Research
Q4 Previews & Outlook
Ally and Synchrony are up against very tough to compete against prior year quarters in regards to their Q4 earnings picture. Fourth-quarter earnings estimates for Ally are currently slated at $0.51 a share compared to $1.08 per share in Q4 2022. On the top line, Q4 sales are projected to be down -9% to $2 billion.
Overall Ally’s annual earnings are expected at $3.12 per share for FY23 compared to $6.06 per share in 2022. However, FY24 earnings are forecasted to rebound and rise 14% to $3.57 per share. Total sales are now projected to dip -3% in FY23 but recover and rise 2% in FY24 to $8.32 billion.
Image Source: Zacks Investment Research
Turning to Synchrony, Q4 earnings are expected to be down -22% to $0.98 a share versus $1.26 per share in the comparative quarter. This is despite fourth quarter sales being projected to rise 8% YoY to $4.45 billion.
Synchrony is now expected to round out FY23 with EPS down -16% to $5.13 per share but FY24 earnings are anticipated to rebound and rise 7% to $5.51 a share. Total sales are expected to have risen 8% in FY23 and are projected to rise another 7% this year to $18.17 billion.
Image Source: Zacks Investment Research
Strong Value
While it may seem like Ally and Synchrony are losing their post-pandemic mojo regarding bottom line figures, reasonable valuations have been the main catalyst to the recent surge in both stocks. To that point, Ally's stock still trades at a very reasonable 10.8X forward earnings multiple while Synchrony shares trade at just 7.3X.
Image Source: Zacks Investment Research
Offering more value to investors, Ally currently has a generous 3.5% annual dividend yield while Synchrony’s 2.67% is nicely above the S&P 500’s 1.4% average as well.
Image Source: Zacks Investment Research
Takeaway
For now, Ally Financial and Synchrony Financial’s stock both land a Zacks Rank #3 (Hold). The possibility of higher highs may largely depend on their Q4 results but holding positions in these consumer finance leaders may continue to pay off at their current levels.
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Time to Buy Ally or Synchrony Financial Stock for Higher Highs?
Much attention will be on the financial sector with JP Morgan (JPM - Free Report) , Bank of America (BAC - Free Report) , and other big banks set to kick-start the Q4 earnings season when they report their quarterly results next Friday.
With that being said several consumer lending stocks have been bright spots in the financial sector as well with Ally Financial (ALLY - Free Report) and Synchrony Financial (SYF - Free Report) standing out in particular.
Ally and Synchrony are hovering near their 52-week highs and will be reporting Q4 results later in the month on January 19 and 23 respectively. Leading up to their reports let’s see if now is a good time to buy Ally or Synchrony stock for higher highs.
Recent Performance Overview
As diversified financial service providers, Ally offers a broad range of financial products and services primarily to the auto industry while Synchrony provides a wide range of credit products through a diverse group of national and regional retailers, local merchants, and manufacturers among others.
Over the last year, Ally’s stock performance has been strong with shares up +36% to top the S&P 500’s +24% while Synchrony’s +17% has been very respectable as well. Notably, Synchrony hit 52-week highs of over $38 a share today and Ally is just at the cusp of its highs of $35.78 a share seen last February.
Image Source: Zacks Investment Research
Q4 Previews & Outlook
Ally and Synchrony are up against very tough to compete against prior year quarters in regards to their Q4 earnings picture. Fourth-quarter earnings estimates for Ally are currently slated at $0.51 a share compared to $1.08 per share in Q4 2022. On the top line, Q4 sales are projected to be down -9% to $2 billion.
Overall Ally’s annual earnings are expected at $3.12 per share for FY23 compared to $6.06 per share in 2022. However, FY24 earnings are forecasted to rebound and rise 14% to $3.57 per share. Total sales are now projected to dip -3% in FY23 but recover and rise 2% in FY24 to $8.32 billion.
Image Source: Zacks Investment Research
Turning to Synchrony, Q4 earnings are expected to be down -22% to $0.98 a share versus $1.26 per share in the comparative quarter. This is despite fourth quarter sales being projected to rise 8% YoY to $4.45 billion.
Synchrony is now expected to round out FY23 with EPS down -16% to $5.13 per share but FY24 earnings are anticipated to rebound and rise 7% to $5.51 a share. Total sales are expected to have risen 8% in FY23 and are projected to rise another 7% this year to $18.17 billion.
Image Source: Zacks Investment Research
Strong Value
While it may seem like Ally and Synchrony are losing their post-pandemic mojo regarding bottom line figures, reasonable valuations have been the main catalyst to the recent surge in both stocks. To that point, Ally's stock still trades at a very reasonable 10.8X forward earnings multiple while Synchrony shares trade at just 7.3X.
Image Source: Zacks Investment Research
Offering more value to investors, Ally currently has a generous 3.5% annual dividend yield while Synchrony’s 2.67% is nicely above the S&P 500’s 1.4% average as well.
Image Source: Zacks Investment Research
Takeaway
For now, Ally Financial and Synchrony Financial’s stock both land a Zacks Rank #3 (Hold). The possibility of higher highs may largely depend on their Q4 results but holding positions in these consumer finance leaders may continue to pay off at their current levels.