It has been about a month since the last earnings report for Synchrony (SYF Quick QuoteSYF - Free Report) . Shares have lost about 0.7% in that time frame, underperforming the S&P 500.

But investors have to be wondering, will the recent negative trend continue leading up to its next earnings release, or is Synchrony due for a breakout? Well, first let's take a quick look at its latest earnings report in order to get a better handle on the recent drivers for Synchrony Financial before we dive into how investors and analysts have reacted as of late.

Synchrony Q2 Earnings Beat Estimates on Improved Efficiency

Synchrony Financial reported second-quarter 2025 adjusted earnings per share (EPS) of $2.50, which surpassed the Zacks Consensus Estimate by 45.4%. The bottom line surged 61.3% year over year.

Net interest income was $4.5 billion, which grew 2.6% year over year. It surpassed the consensus mark by 0.5%.

The strong quarterly results benefited from improved net interest margin, increased interest and fees on loans in sales platforms like Digital, Health & Wellness and Lifestyle and improved efficiency ratio. Reduced provision for credit losses also contributed to the upside. However, the upside was partly offset by declining overall loan receivables and purchase volumes due to the impact of credit actions and selective consumer spending.

Synchrony’s Q2 Results in Detail

Retailer share arrangements of Synchrony advanced 22% year over year to $992 million in the quarter under review. Total loan receivables of $99.8 billion slipped 2.5% year over year and missed the Zacks Consensus Estimate of $100.9 billion as well as our estimate of $102.5 billion.

Total deposits dipped 1% year over year to $82.3 billion and fell short of our estimate of $83.9 billion. Provision for credit losses was $1.1 billion, which tumbled 32.2% year over year on the back of a reserve release. The metric came in lower than our estimate of $1.7 billion.

Synchrony’s purchase volume fell 2% year over year to $46.1 billion due to selective consumer spending and credit actions. The figure beat our estimate of $45.4 billion.

Interest and fees on loans totaled $5.3 billion, which inched up 0.5% year over year and beat our estimate by 0.5%. The metric was aided by an expanding loan receivables portfolio, partly offset by a decline in benchmark rates and late fee incidence. Net interest margin improved 32 basis points (bps) year over year to 14.8% in the second quarter, slightly higher than the Zacks Consensus Estimate of 14.5%.

Average active accounts of 68.1 million slipped 4% year over year and missed the Zacks Consensus Estimate and our estimate of 70.5 million.

Total other expenses of SYF increased 5.8% year over year to $1.25 billion, higher than our estimate of $1.2 billion. The efficiency ratio of 34.1% improved 240 bps year over year and came above the consensus mark of 32.5%.

Movement in Individual Sales Platforms

Home & Auto period-end loan receivables decreased 6.9% year over year in the second quarter. Purchase volume tumbled 7.2% year over year due to the impact of credit actions and reduced consumer spending. Interest and fees on loans declined 1% year over year.

Digital period-end loan receivables inched up 0.3% year over year. Purchase volume rose 1.8% year over year due to a rise in new accounts and spend per account. Interest and fees on loans rose 2.1% year over year.

Diversified & Value period-end loan receivables remained in line year over year in the quarter under review. Purchase volume inched up 0.4% year over year due to fewer active accounts. Interest and fees on loans decreased 0.5% year over year.

Health & Wellness period-end loan receivables inched up 0.2% year over year. However, purchase volume fell 2% year over year due to decreased spending in Dental and Cosmetic. Interest and fees on loans advanced 1.3% year over year.

Lifestyle period-end loan receivables decreased 2.2% year over year in the second quarter. Purchase volume fell 6.1% year over year due to reduced spending in Outdoor and Specialty. Interest and fees on loans grew 1.2% year over year.

Synchrony’s Financial Position (As of June 30, 2025)

Synchrony exited the second quarter with cash and equivalents of $19.5 billion, which climbed from the 2024-end level of $14.7 billion.

Total assets of $120.1 billion increased from the figure of $119.5 billion at 2024-end.

Total borrowings were $16 billion, up from the figure of $15.5 billion as of Dec. 31, 2024.

Total equity of $17 billion increased from the 2024-end figure of $16.6 billion.

SYF’s balance sheet was consistently strong in the reported quarter, with total liquidity of $21.8 billion accounting for 18.1% of its total assets.

Return on assets increased 100 bps year over year to 3.2% in the second quarter. Return on equity was 23.1%, which improved 600 bps year over year.

Capital Deployment Update

Synchrony returned capital worth $500 million through share buybacks and paid common stock dividends of $114 million in the second quarter. It had a leftover capacity of around $2 billion under its share buyback authorization as of June 30, 2025.

Synchrony’s 2025 Guidance

Synchrony now anticipates remaining flat in period-end loan receivables. Slower purchase volume growth is expected to reflect credit actions and consumer spending behavior. The company expects the payment rate to be higher, consistent with improved credit performance and a shift in portfolio credit mix.

Net revenues are now projected to be between $15 billion and $15.3 billion, below the previously expected range of $15.2-$15.7 billion.

Management expects net charge-offs to be between 5.6% and 5.8% compared with the earlier guidance of 5.8-6% and follow normal seasonal trends in the second half of the year.

The efficiency ratio is now expected to stay between 32% and 33%, compared with the earlier guidance of 31.5-32.5%.

How Have Estimates Been Moving Since Then?

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

VGM Scores

Currently, Synchrony has a average Growth Score of C, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock has a grade of A on the value side, putting it in the top quintile for value investors.

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. Interestingly, Synchrony has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.