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Are Investors Undervaluing Synchrony (SYF) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Synchrony (SYF - Free Report) . SYF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 6.68 right now. For comparison, its industry sports an average P/E of 9.81. SYF's Forward P/E has been as high as 15.25 and as low as 6.47, with a median of 9.41, all within the past year.

We also note that SYF holds a PEG ratio of 0.64. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SYF's PEG compares to its industry's average PEG of 1.02. Within the past year, SYF's PEG has been as high as 1.99 and as low as 0.60, with a median of 1.11.

Another valuation metric that we should highlight is SYF's P/B ratio of 1.40. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.97. SYF's P/B has been as high as 2.18 and as low as 1.36, with a median of 1.80, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SYF has a P/S ratio of 1.13. This compares to its industry's average P/S of 2.32.

Finally, investors should note that SYF has a P/CF ratio of 7.54. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. SYF's P/CF compares to its industry's average P/CF of 9.56. Over the past 52 weeks, SYF's P/CF has been as high as 14.40 and as low as 7.28, with a median of 11.25.

These are just a handful of the figures considered in Synchrony's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SYF is an impressive value stock right now.




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