It has been about a month since the last earnings report for Synchrony (SYF Quick QuoteSYF - Free Report) . Shares have lost about 8.4% in that time frame, underperforming the S&P 500.

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 catalysts for Synchrony Financial before we dive into how investors and analysts have reacted as of late.

Synchrony Q1 Earnings Match Estimates on Purchase Volume Growth

Synchrony reported first-quarter 2026 adjusted earnings per share (EPS) of $2.27, in line with the Zacks Consensus Estimate. The bottom line increased 20.1% year over year.

Net interest income reached $4.64 billion, up 3.8% from the prior-year period but missed the consensus estimate by 0.5%.

The quarterly earnings were supported by a higher net interest margin and strong purchase volume growth. A lower provision for credit losses also contributed to the performance. These positives were partly offset by lower deposits, a decline in average active accounts and higher expenses. 

SYF’s Q1 Results in Detail

Retailer share arrangements of Synchrony advanced 19.6% year over year to $1.1 billion in the first quarter. Total loan receivables of $100.1 billion, up 0.5% year over year, beat the Zacks Consensus Estimate of $99.3 billion as well as our estimate of $98.9 billion.

Total deposits dipped 0.6% year over year to $82.9 billion and fell short of our estimate of $83.2 billion. The provision for credit losses was $1.3 billion, which declined 10.5% year over year on the back of lower net charge-offs and reserve release. The metric came in slightly lower than our estimate of $1.4 billion.

Synchrony’s purchase volume rose 5.6% year over year to $43 billion on higher spend per account and strong customer response. The figure beat the consensus estimate of $42 billion and our estimate of $41.4 billion.

Interest and fees on loans totaled $5.4 billion, rising 1.9% year over year and in line with our estimate. The increase was driven by higher loan receivables yield, primarily reflecting the impact of PPPCs, and was partially offset by reduced benchmark rates. Net interest margin improved 76 basis points year over year to 15.5% in the first quarter but came in slightly below the Zacks Consensus Estimate of 15.6%.

Average active accounts of 68.8 million slipped 0.7% year over year and missed the consensus mark and our estimate of 69.4 million.

Total other expenses of SYF increased 5.9% year over year to $1.3 billion, lower than our estimate of $1.4 billion. The efficiency ratio of 35.6% deteriorated 220 bps year over year and came above the consensus mark of 35%.

Movement in Individual Sales Platforms

Home & Auto period-end loan receivables decreased 3.7% year over year in the first quarter. Purchase volume remained flat, with higher spend per account and growth in furniture and electronics offset by selective home improvement spending and fewer active accounts. Interest and fees on loans declined 1.6% year over year.

Digital period-end loan receivables inched up 3.5% year over year in the reported quarter. Purchase volume rose 8.2%, driven by higher spend per account and strong customer response to enhanced offerings. Interest and fees on loans increased 5.7% year over year. 

Diversified & Value period-end loan receivables rose 4.3% year over year in the quarter under review. Purchase volume rose 8.7%, driven by partner expansion and higher spend per account. Interest and fees on loans increased 1.4% year over year.

Health & Wellness period-end loan receivables inched up 0.8% year over year in the first quarter. Purchase volume rose 2.6%, driven by growth in pet and audiology, partly offset by weaker cosmetic and dental spending and fewer active accounts. Interest and fees on loans advanced 3.7% year over year.

Lifestyle period-end loan receivables decreased 1.3% year over year in the first quarter. Purchase volume rose 6.6%, driven by other apparel, goods and luxury, partly offset by fewer active accounts. Interest and fees on loans decreased 1.1% year over year.

Financial Position (as of March 31, 2026)

Synchrony exited the first quarter with cash and equivalents of $20.6 billion, which increased from the 2025-end level of $15 billion. Total assets of $121.5 billion increased from $119.1 billion at the 2025-end level. SYF’s balance sheet was consistently strong in the reported quarter, with total liquidity of $22.8 billion accounting for 18.8% of its total assets.

Total borrowings were $16.4 billion, up from $15.2 billion as of Dec. 31, 2025. Total equity of $16.5 billion decreased from the 2025-end figure of $16.8 billion.

Return on assets increased 20 bps year over year to 2.7% in the first quarter. Return on equity was 19.5%, which increased 110 bps year over year.

Capital Deployment Update

Synchrony returned $1 billion to shareholders, including $900 million through share buybacks and $104 million in dividends. The board approved a planned 13% increase in the quarterly dividend to 34 cents per share, effective from the third quarter of 2026.

The board approved a new share repurchase program of up to $6.5 billion, starting in the second quarter of 2026, with no expiration date. This replaces the previous program, which was set to expire on June 30, 2026.

SYF’s 2026 Guidance

Synchrony continues to anticipate mid-single-digit growth in period-end loan receivables. Strong purchase volume growth is expected to continue throughout 2026. The payment rate is expected to remain high. SYF expects receivables growth to accelerate in the second half of 2026.

Earnings per share for 2026 are projected to be in the range of $9.10 to $9.50.

RSA, as a percentage of average loan receivables, is increasing, reflecting strong program performance, and is expected to remain within the 4-4.5% target range.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in estimates revision.

The consensus estimate has shifted -8.11% due to these changes.

VGM Scores

Currently, Synchrony has a average Growth Score of C, a score with the same score on the momentum front. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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 downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Synchrony has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Synchrony is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Applied Digital Corporation (APLD Quick QuoteAPLD - Free Report) , a stock from the same industry, has gained 21.9%. The company reported its results for the quarter ended February 2026 more than a month ago.

Applied Digital Corporation reported revenues of $126.64 million in the last reported quarter, representing a year-over-year change of +139.3%. EPS of -$0.36 for the same period compares with -$0.16 a year ago.

Applied Digital Corporation is expected to post a loss of $0.13 per share for the current quarter, representing a year-over-year change of -8.3%. Over the last 30 days, the Zacks Consensus Estimate has changed -18.2%.

Applied Digital Corporation has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of F.