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Capital One vs. Synchrony Financial: Which Stock is a Better Pick Now?
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Key Takeaways
Capital One bought Discover in a $35B all-stock deal, becoming the largest U.S. credit card issuer.
Synchrony grows via acquisitions and partnerships but cut 2025 revenue guidance on higher RSAs.
Analysts project stronger revenue and earnings growth for COF than SYF through 2026.
Capital One (COF - Free Report) and Synchrony Financial (SYF - Free Report) are major players in the U.S. financial services industry, primarily focusing on credit card and consumer lending. They generate a large part of their revenues from interest income, transaction fees and customer spending.
COF and SYF target consumer and small business segments, but their business strategies are different. While SYF leans more toward retail, affinity relationships and commercial customers, COF operates more as a traditional bank with a large credit card portfolio and auto lending presence.
Over the past three months, COF and SYF have risen 17.7% and 29.2%, respectively. Nonetheless, sticky inflation, uncertainty regarding tariff policies and relatively higher interest rates have kept these firms under pressure.
Image Source: Zacks Investment Research
Hence, the question arises: Which credit card firm — COF or SYF— is a better choice for investors as they navigate the challenging macroeconomic backdrop? Let’s find out.
The Case for Capital One
In a strategic move to enhance its market position, Capital One acquired Discover Financial Services in May 2025 in a $35 billion all-stock deal. This deal made the company the largest U.S. credit card issuer by balances and significantly expanded its payment network capabilities.
The deal gave Capital One control of Discover Financial’s payments network — one of only four in the United States — generating greater revenues from interchange fees and offering strategic independence from Visa (V - Free Report) and Mastercard (MA - Free Report) . The merger is expected to create significant expense and revenue synergies and strengthen COF’s digital banking capabilities.
Over the years, the company has pursued a strategic acquisition strategy to diversify its offerings and expand its market presence. Some of its notable acquisitions are ING Direct USA, HSBC's U.S. Credit Card Portfolio and TripleTree. These acquisitions have been instrumental in transforming Capital One from a monoline credit card issuer into a diversified financial services firm with a significant presence in retail banking, commercial lending and digital banking platforms.
Though the company’s revenues declined marginally in 2020, the metric witnessed a five-year (2019-2024) CAGR of 6.5%. In the same time frame, net loans held for investment recorded a CAGR of 4.3%. The uptrend for both metrics continued during the first half of 2025. Revenue prospects look encouraging, given the company’s solid credit card and online banking businesses, Discover Financial's buyout and decent loan demand.
Image Source: Zacks Investment Research
Capital One is likely to keep benefiting from higher interest rates and a steady demand for credit card loans. As such, the company’s net interest income (NII) and net interest margin (NIM) have been rising. The company's NII witnessed a CAGR of 6% over the five years ended 2024. Also, NIM expanded to 6.88% in 2024 from 6.63% in 2023. The momentum continued for both NII & NIM in the first six months of 2025.
Further, COF, which primarily serves customers in the United States, Canada and the U.K., boasts a solid balance sheet position. Though it slashed its quarterly dividend by 75% in 2020, based on the Federal Reserve’s requirements, Capital One restored it to 40 cents per share in the first quarter of 2021. Moreover, in July 2021, the company hiked the same by 50% to 60 cents per share and has maintained it at the same level.
The company also has a share repurchase plan in place. In January 2022, it authorized a repurchase program of up to $5 billion in shares, while in April 2022, it announced an additional $5 billion worth of buybacks. As of June 30, 2025, nearly $3.73 billion worth of repurchase authorization remained.
Meanwhile, given the current tough operating backdrop and tariff-related ambiguity, Capital One faces headwinds in consumer spending and the auto lending business. As such, its asset quality will likely be under pressure. Also, the company spends heavily on marketing (almost 20% of the total operating expenses) and technology.
The Case for Synchrony Financial
Synchrony Financial stands out by leveraging its strong distribution channel to offer a broad range of products, including private-label credit cards and dual Cards for use on MasterCard and Visa networks. It has the potential capability to issue dual cards for use on the American Express and Discover networks, contributing to a more profitable and resilient business model.
Further, the company has been driving growth through targeted acquisitions and strategic partnerships that enhance digital capabilities and diversify offerings. In 2024, it acquired Ally Financial’s point-of-sale financing business, Ally Lending.
Moreover, the Allegro Credit acquisition expanded its presence in audiology and dental financing, while partnerships with PayPal, Venmo, LG Electronics, Mastercard, and others have modernized payment experiences. Recent expansions with Ashley, American Eagle Outfitters and an alliance with Adobe Commerce further strengthen its ecosystem and e-commerce reach. It partnered with OnePay to power a new credit card program at Walmart, offering a smarter, embedded credit experience for U.S. shoppers.
Further, Syncrony Financial has a solid balance sheet. As of June 30, 2025, it had $19.5 billion in cash and cash equivalents, up 32.7% from the end of 2024. Total borrowings were $16 billion. Given its earnings strength and solid liquidity position, the company’s enhanced capital distribution plans look sustainable.
In April 2025, it announced a dividend hike of 29% from the prior payment to 30 cents per share. The company also has a share repurchase plan in place. In April 2025, it authorized a repurchase program of up to $2.5 billion through June 30, 2026. As of June 30, 2025, nearly $2 billion worth of shares remained available under the program.
The company’s revenues witnessed a five-year CAGR of 2.6% (ended 2024). The trend reversed in the first six months of 2025 on a year-over-year basis.
Image Source: Zacks Investment Research
Management anticipates net revenues to be in the range of $15-$15.3 billion for 2025, down from the earlier guidance of $15.2-$15.7 billion. This downward revision is on account of higher Retailer Share Arrangements or RSA and lower loan receivables.
Also, despite financial strength, Synchrony Financial’s business model exposes it to credit risk, impacting its credit quality, due to a higher allowance for loan loss, especially in an economy grappling with inflationary pressures and higher-than-normal interest rates. The lingering macroeconomic headwinds and tariff uncertainties are expected to weigh on its financials to some extent.
How Do Estimates Compare for COF & SYF?
The Zacks Consensus Estimate for COF’s 2025 and 2026 revenues implies year-over-year growth of 34.1% and 18.5%, respectively. Further, the consensus estimate for earnings indicates a 19.1% and 13.7% rise for 2025 and 2026, respectively. Earnings estimates for both years have been revised upward over the past week.
Image Source: Zacks Investment Research
On the contrary, analysts are slightly less bullish on Synchrony Financial’s revenue prospects. The consensus mark for SYF’s 2025 and 2026 revenues suggests a year-over-year rise of 3.1% and 5%, respectively. The consensus estimate for earnings suggests a 25.6% and 9.7% surge for 2025 and 2026, respectively. Earnings estimates for both years have been revised upward over the past seven days.
Image Source: Zacks Investment Research
Capital One & Synchrony Financial: Valuation & Other Comparisons
Valuation-wise, COF is currently trading at the 12-month forward price-to-earnings (P/E) of 12.51X, higher than its five-year median of 9.04X. SYF stock, on the other hand, is currently trading at a 12-month trailing P/TB of 8.56X, which is also higher than its five-year median of 7.45X.
Image Source: Zacks Investment Research
While Capital One is trading at a premium to Synchrony Financial, its valuation is justified, given its superior growth trajectory.
However, Synchrony Financial’s return on equity (ROE) of 21.35% is way above Capital One’s 10.01%. This reflects SYF’s efficient use of shareholder funds to generate profits.
Image Source: Zacks Investment Research
SYF’s dividend yield of 1.59% is slightly higher than Capital One’s 1.07%. This reflects that SYF has lower growth opportunities than COF.
Image Source: Zacks Investment Research
COF or SYF: Which Stock is the Smarter Investment Option?
Capital One and Synchrony Financial are prominent U.S. credit card issuers and consumer lenders, operating in the financial services sector. Both are taking proactive steps to navigate the uncertain macroeconomic backdrop because of tariff plans and resultant price rises, and higher interest rates for a longer period.
Synchrony Financial has a robust liquidity position and a strong distribution channel alongside diverse streams of revenues. Nonetheless, higher RSAs and expenses and lower loans receivable are likely to impact revenues, which is reflected in management guidance. Also, in this volatile environment, the allowance for loan losses is likely to remain elevated, impacting profitability in the near term.
On the other hand, Capital One has wrapped up one of the biggest deals of its lifetime recently. Moreover, its strategic partnerships and higher credit card demands are likely to support its growth. Additionally, higher interest rates will continue to aid NII and NIM. Though it's trading at a premium compared with Synchrony Financial, its valuation remains justified on the back of bullish analyst sentiments and growth trajectory. Thus, Capital One seems to be a better bet at the moment.
Image: Bigstock
Capital One vs. Synchrony Financial: Which Stock is a Better Pick Now?
Key Takeaways
Capital One (COF - Free Report) and Synchrony Financial (SYF - Free Report) are major players in the U.S. financial services industry, primarily focusing on credit card and consumer lending. They generate a large part of their revenues from interest income, transaction fees and customer spending.
COF and SYF target consumer and small business segments, but their business strategies are different. While SYF leans more toward retail, affinity relationships and commercial customers, COF operates more as a traditional bank with a large credit card portfolio and auto lending presence.
Over the past three months, COF and SYF have risen 17.7% and 29.2%, respectively. Nonetheless, sticky inflation, uncertainty regarding tariff policies and relatively higher interest rates have kept these firms under pressure.
Image Source: Zacks Investment Research
Hence, the question arises: Which credit card firm — COF or SYF— is a better choice for investors as they navigate the challenging macroeconomic backdrop? Let’s find out.
The Case for Capital One
In a strategic move to enhance its market position, Capital One acquired Discover Financial Services in May 2025 in a $35 billion all-stock deal. This deal made the company the largest U.S. credit card issuer by balances and significantly expanded its payment network capabilities.
The deal gave Capital One control of Discover Financial’s payments network — one of only four in the United States — generating greater revenues from interchange fees and offering strategic independence from Visa (V - Free Report) and Mastercard (MA - Free Report) . The merger is expected to create significant expense and revenue synergies and strengthen COF’s digital banking capabilities.
Over the years, the company has pursued a strategic acquisition strategy to diversify its offerings and expand its market presence. Some of its notable acquisitions are ING Direct USA, HSBC's U.S. Credit Card Portfolio and TripleTree. These acquisitions have been instrumental in transforming Capital One from a monoline credit card issuer into a diversified financial services firm with a significant presence in retail banking, commercial lending and digital banking platforms.
Though the company’s revenues declined marginally in 2020, the metric witnessed a five-year (2019-2024) CAGR of 6.5%. In the same time frame, net loans held for investment recorded a CAGR of 4.3%. The uptrend for both metrics continued during the first half of 2025. Revenue prospects look encouraging, given the company’s solid credit card and online banking businesses, Discover Financial's buyout and decent loan demand.
Image Source: Zacks Investment Research
Capital One is likely to keep benefiting from higher interest rates and a steady demand for credit card loans. As such, the company’s net interest income (NII) and net interest margin (NIM) have been rising. The company's NII witnessed a CAGR of 6% over the five years ended 2024. Also, NIM expanded to 6.88% in 2024 from 6.63% in 2023. The momentum continued for both NII & NIM in the first six months of 2025.
Further, COF, which primarily serves customers in the United States, Canada and the U.K., boasts a solid balance sheet position. Though it slashed its quarterly dividend by 75% in 2020, based on the Federal Reserve’s requirements, Capital One restored it to 40 cents per share in the first quarter of 2021. Moreover, in July 2021, the company hiked the same by 50% to 60 cents per share and has maintained it at the same level.
The company also has a share repurchase plan in place. In January 2022, it authorized a repurchase program of up to $5 billion in shares, while in April 2022, it announced an additional $5 billion worth of buybacks. As of June 30, 2025, nearly $3.73 billion worth of repurchase authorization remained.
Meanwhile, given the current tough operating backdrop and tariff-related ambiguity, Capital One faces headwinds in consumer spending and the auto lending business. As such, its asset quality will likely be under pressure. Also, the company spends heavily on marketing (almost 20% of the total operating expenses) and technology.
The Case for Synchrony Financial
Synchrony Financial stands out by leveraging its strong distribution channel to offer a broad range of products, including private-label credit cards and dual Cards for use on MasterCard and Visa networks. It has the potential capability to issue dual cards for use on the American Express and Discover networks, contributing to a more profitable and resilient business model.
Further, the company has been driving growth through targeted acquisitions and strategic partnerships that enhance digital capabilities and diversify offerings. In 2024, it acquired Ally Financial’s point-of-sale financing business, Ally Lending.
Moreover, the Allegro Credit acquisition expanded its presence in audiology and dental financing, while partnerships with PayPal, Venmo, LG Electronics, Mastercard, and others have modernized payment experiences. Recent expansions with Ashley, American Eagle Outfitters and an alliance with Adobe Commerce further strengthen its ecosystem and e-commerce reach. It partnered with OnePay to power a new credit card program at Walmart, offering a smarter, embedded credit experience for U.S. shoppers.
Further, Syncrony Financial has a solid balance sheet. As of June 30, 2025, it had $19.5 billion in cash and cash equivalents, up 32.7% from the end of 2024. Total borrowings were $16 billion. Given its earnings strength and solid liquidity position, the company’s enhanced capital distribution plans look sustainable.
In April 2025, it announced a dividend hike of 29% from the prior payment to 30 cents per share. The company also has a share repurchase plan in place. In April 2025, it authorized a repurchase program of up to $2.5 billion through June 30, 2026. As of June 30, 2025, nearly $2 billion worth of shares remained available under the program.
The company’s revenues witnessed a five-year CAGR of 2.6% (ended 2024). The trend reversed in the first six months of 2025 on a year-over-year basis.
Image Source: Zacks Investment Research
Management anticipates net revenues to be in the range of $15-$15.3 billion for 2025, down from the earlier guidance of $15.2-$15.7 billion. This downward revision is on account of higher Retailer Share Arrangements or RSA and lower loan receivables.
Also, despite financial strength, Synchrony Financial’s business model exposes it to credit risk, impacting its credit quality, due to a higher allowance for loan loss, especially in an economy grappling with inflationary pressures and higher-than-normal interest rates. The lingering macroeconomic headwinds and tariff uncertainties are expected to weigh on its financials to some extent.
How Do Estimates Compare for COF & SYF?
The Zacks Consensus Estimate for COF’s 2025 and 2026 revenues implies year-over-year growth of 34.1% and 18.5%, respectively. Further, the consensus estimate for earnings indicates a 19.1% and 13.7% rise for 2025 and 2026, respectively. Earnings estimates for both years have been revised upward over the past week.
Image Source: Zacks Investment Research
On the contrary, analysts are slightly less bullish on Synchrony Financial’s revenue prospects. The consensus mark for SYF’s 2025 and 2026 revenues suggests a year-over-year rise of 3.1% and 5%, respectively. The consensus estimate for earnings suggests a 25.6% and 9.7% surge for 2025 and 2026, respectively. Earnings estimates for both years have been revised upward over the past seven days.
Image Source: Zacks Investment Research
Capital One & Synchrony Financial: Valuation & Other Comparisons
Valuation-wise, COF is currently trading at the 12-month forward price-to-earnings (P/E) of 12.51X, higher than its five-year median of 9.04X. SYF stock, on the other hand, is currently trading at a 12-month trailing P/TB of 8.56X, which is also higher than its five-year median of 7.45X.
Image Source: Zacks Investment Research
While Capital One is trading at a premium to Synchrony Financial, its valuation is justified, given its superior growth trajectory.
However, Synchrony Financial’s return on equity (ROE) of 21.35% is way above Capital One’s 10.01%. This reflects SYF’s efficient use of shareholder funds to generate profits.
Image Source: Zacks Investment Research
SYF’s dividend yield of 1.59% is slightly higher than Capital One’s 1.07%. This reflects that SYF has lower growth opportunities than COF.
Image Source: Zacks Investment Research
COF or SYF: Which Stock is the Smarter Investment Option?
Capital One and Synchrony Financial are prominent U.S. credit card issuers and consumer lenders, operating in the financial services sector. Both are taking proactive steps to navigate the uncertain macroeconomic backdrop because of tariff plans and resultant price rises, and higher interest rates for a longer period.
Synchrony Financial has a robust liquidity position and a strong distribution channel alongside diverse streams of revenues. Nonetheless, higher RSAs and expenses and lower loans receivable are likely to impact revenues, which is reflected in management guidance. Also, in this volatile environment, the allowance for loan losses is likely to remain elevated, impacting profitability in the near term.
On the other hand, Capital One has wrapped up one of the biggest deals of its lifetime recently. Moreover, its strategic partnerships and higher credit card demands are likely to support its growth. Additionally, higher interest rates will continue to aid NII and NIM. Though it's trading at a premium compared with Synchrony Financial, its valuation remains justified on the back of bullish analyst sentiments and growth trajectory. Thus, Capital One seems to be a better bet at the moment.
Currently, Capital One carries a Zacks Rank #2 (Buy) while Synchrony Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.