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Can Solid Revenues Up Synchrony Financial (SYF) Q2 Earnings?
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Synchrony Financial (SYF - Free Report) will release second-quarter 2018 results on Jul 27, 2018, before the market opens. Last reported quarter, the company delivered a positive earnings surprise of 12.16%.
Let’s see, how things are shaping up prior to this announcement.
Factors to be Considered for Second Quarter
Synchrony Financial’s performance is likely to be backed by its strategic partnerships and planned investments. The top line is expected to get a boost from strong deposit generation, loans receivables and growing online purchases. The company has been consistently putting efforts to expand its digital innovation and data analytics, which might drive its revenue base. The acquisition of Loop Commerce is expected to enhance the company's technology portfolio along with making it more focused on digital personalized experiences. The Zacks Consensus Estimate for revenues is pegged at$3.9 billion, reflecting a 5% year-over-year increase.
A lower tax incidence owing to recent tax rate cut will likely boost the company’s bottom line.
The Zacks Consensus Estimate for earnings is pegged at 82 cents, up 34.4% year over year.
However, expenses are likely to rise on initiatives such as strategic investments in sales platforms, expenditure for streamlining back office and enhancements in the direct deposit program.
The company expects core margin in the 16.25% range for the second quarter. Moreover, the reserve build is projected to be in the $175 million range. The company’s consistent growth of its deposit base is likely to continue with its momentum in the to-be reported quarter, thus solidifying the funding profile.
It has very likely deployed its capital to shareholders and enhanced their value, mainly backed by its diversified funding sources, a strong balance sheet and solid liquidity levels.
The company expects to build the prefunding ahead of portfolio acquisition and as a result, the margin is predicted to decline in the 15.25-15.5% range.
What the Quantitative Model States
Our proven model does not conclusively show that Synchrony Financial is likely to beat on earnings this to-be-reported quarter. This is because the stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you can see below.
Earnings ESP: Synchrony Financial has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Synchrony Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, the stock’s 0.00% ESP makes surprise prediction difficult.
We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the finance sector with the perfect combination of elements to surpass estimates in the next releases are as follows:
Oaktree Specialty Lending Corp. (OCSL - Free Report) has an Earnings ESP of +3.45%. This Zacks #3 Ranked company is set to report second-quarter earnings on Aug 8.
Aon plc (AON - Free Report) is set to report second-quarter 2018 earnings on Jul 27. The stock has an Earnings ESP of +0.23% and a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Can Solid Revenues Up Synchrony Financial (SYF) Q2 Earnings?
Synchrony Financial (SYF - Free Report) will release second-quarter 2018 results on Jul 27, 2018, before the market opens. Last reported quarter, the company delivered a positive earnings surprise of 12.16%.
Let’s see, how things are shaping up prior to this announcement.
Factors to be Considered for Second Quarter
Synchrony Financial’s performance is likely to be backed by its strategic partnerships and planned investments. The top line is expected to get a boost from strong deposit generation, loans receivables and growing online purchases. The company has been consistently putting efforts to expand its digital innovation and data analytics, which might drive its revenue base. The acquisition of Loop Commerce is expected to enhance the company's technology portfolio along with making it more focused on digital personalized experiences. The Zacks Consensus Estimate for revenues is pegged at$3.9 billion, reflecting a 5% year-over-year increase.
A lower tax incidence owing to recent tax rate cut will likely boost the company’s bottom line.
The Zacks Consensus Estimate for earnings is pegged at 82 cents, up 34.4% year over year.
However, expenses are likely to rise on initiatives such as strategic investments in sales platforms, expenditure for streamlining back office and enhancements in the direct deposit program.
The company expects core margin in the 16.25% range for the second quarter. Moreover, the reserve build is projected to be in the $175 million range. The company’s consistent growth of its deposit base is likely to continue with its momentum in the to-be reported quarter, thus solidifying the funding profile.
It has very likely deployed its capital to shareholders and enhanced their value, mainly backed by its diversified funding sources, a strong balance sheet and solid liquidity levels.
The company expects to build the prefunding ahead of portfolio acquisition and as a result, the margin is predicted to decline in the 15.25-15.5% range.
What the Quantitative Model States
Our proven model does not conclusively show that Synchrony Financial is likely to beat on earnings this to-be-reported quarter. This is because the stock needs to have the right combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you can see below.
Earnings ESP: Synchrony Financial has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Synchrony Financial Price and EPS Surprise
Synchrony Financial Price and EPS Surprise | Synchrony Financial Quote
Zacks Rank: Synchrony Financial carries a Zacks Rank #3, which increases the predictive power of ESP. However, the stock’s 0.00% ESP makes surprise prediction difficult.
We caution against the Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Some stocks worth considering from the finance sector with the perfect combination of elements to surpass estimates in the next releases are as follows:
Moody's Corporation (MCO - Free Report) is set to report second-quarter earnings on Jul 27. This #3 Ranked stock has an Earnings ESP of +0.97%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Oaktree Specialty Lending Corp. (OCSL - Free Report) has an Earnings ESP of +3.45%. This Zacks #3 Ranked company is set to report second-quarter earnings on Aug 8.
Aon plc (AON - Free Report) is set to report second-quarter 2018 earnings on Jul 27. The stock has an Earnings ESP of +0.23% and a Zacks Rank of 3.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>