Core Insights - Investors are evaluating Synchrony (SYF) and SoFi Technologies, Inc. (SOFI) for potential undervalued stock opportunities in the Financial - Miscellaneous Services sector [1] Valuation Metrics - SYF has a Zacks Rank of 2 (Buy), indicating a positive earnings outlook, while SOFI has a Zacks Rank of 3 (Hold) [3] - SYF's forward P/E ratio is 8.55, significantly lower than SOFI's forward P/E of 62.38, suggesting SYF is undervalued [5] - SYF's PEG ratio is 0.73, compared to SOFI's PEG ratio of 2.33, indicating SYF's expected earnings growth is more favorable [5] - SYF has a P/B ratio of 1.66, while SOFI's P/B ratio is 2.87, further supporting SYF's valuation advantage [6] - Based on these metrics, SYF holds a Value grade of A, whereas SOFI has a Value grade of F, making SYF a more attractive option for value investors [6]

Synchrony Financial (SYF) Conference Summary Company Overview - **Company**: Synchrony Financial (SYF) - **Date of Conference**: February 10, 2025 - **Participants**: Brian Wenzel (CFO), Erika Penala (Analyst) Key Points Industry and Economic Environment - The company navigated a challenging macroeconomic environment in 2024, focusing on curtailing net credit losses and maintaining margins [3][4] - The first half of 2025 is expected to be similar to the end of 2024, with muted progress against inflation and a pessimistic outlook on Federal Reserve rate actions [5][6] Financial Performance and Credit Metrics - The delinquency rate is reported at 4.7%, which is 19 basis points better than historical seasonality [14][15] - The charge-off rate stands at 6.2%, with expectations to outperform seasonal trends in the first quarter of 2025 [16] - The company anticipates a net charge-off rate between 5.8% and 6.1% for the full year [16] Consumer Behavior and Confidence - Consumer confidence is expected to be shaky in the first half of 2025, with consumers remaining cautious in their spending due to affordability issues [19][20] - Despite a strong purchase volume growth in 2024, the company acknowledges that consumer confidence may not align with spending patterns [19] Credit Actions and Strategy - Credit actions were initiated in mid-2023 and early 2024, focusing on the ability to pay and debt consolidation loans [22][23] - The company aims to protect its portfolio and prevent delinquency acceleration through these credit actions [24] Future Growth and Credit Box Strategy - The company is currently in a restrictive credit position but may consider loosening restrictions in the second half of 2025 if delinquency performance continues to improve [26][30] - Pro-growth credit actions may include credit line increases and upgrades from private label to dual cards [30] Regulatory Environment and Late Fees - The company is closely monitoring the regulatory landscape, particularly regarding the CFPB and potential changes to late fee rules [42][45] - There is uncertainty about the impact of regulatory changes on the company's operations and profitability [79][80] Partnership and Market Opportunities - The company is focused on maintaining strong partnerships and is disciplined in pricing during negotiations [59][60] - There is an increase in market activity and opportunities for new partnerships, with a focus on long-term sustainability [58][61] Funding Strategy and Digital Banking - The company does not plan to lead in digital banking pricing but aims to remain competitive while maintaining a focus on product quality [62][68] - The funding strategy includes a cautious approach to deposit growth and liquidity management [66][67] Capital Management and Share Buybacks - The company is preparing for its first stress capital buffer next year and is focused on optimizing capital towards an 11% CET1 [81][84] - Share buybacks are considered a tool for managing capital in response to market conditions [82] Conclusion - Overall, Synchrony Financial expresses a positive outlook for 2025, emphasizing disciplined growth, strong credit metrics, and a focus on consumer behavior amidst a challenging economic backdrop [7][18]

Financial Performance - Net earnings increased 56.3% to $3.5 billion for the year ended December 31, 2024, primarily driven by an after-tax gain on sale related to Pets Best of $802 million[149]. - Loan receivables increased 1.7% to $104.7 billion at December 31, 2024, driven by lower customer payment rates and the impact of the Ally Lending acquisition[149]. - Net interest income increased 6.0% to $18.0 billion for the year ended December 31, 2024, with interest and fees on loans increasing 8.5%[149]. - Provision for credit losses increased by $768 million to $6.7 billion for the year ended December 31, 2024, primarily driven by higher net charge-offs[149]. - Other income increased by $1.2 billion to $1.5 billion for the year ended December 31, 2024, primarily driven by a $1.1 billion gain on sale related to the Pets Best disposition[149]. - Total deposits increased 1.1% to $82.1 billion at December 31, 2024, representing 84% of total funding sources[149]. - The net charge-off rate increased 144 basis points to 6.31% for the year ended December 31, 2024[149]. - The allowance coverage ratio increased to 10.44% at December 31, 2024, compared to 10.26% at December 31, 2023[149]. - Interest income increased by $1.9 billion, or 9.3%, for the year ended December 31, 2024, primarily driven by an 8.5% increase in interest and fees on loans[176]. - Average loan receivables increased by 7.3% to $101.7 billion for the year ended December 31, 2024, influenced by lower customer payment rates and the Ally Lending acquisition[177]. Customer Engagement and Digital Capabilities - Approximately 57% of consumer revolving applications in 2024 were processed through a digital channel, showcasing the company's digital capabilities[25]. - The company emphasizes its innovative digital capabilities and omnichannel technology to provide seamless experiences for partners and customers[25]. - Digital sales accounted for $6.3 billion, or 29%, of total interest and fees on loans for the year ended December 31, 2024[33]. - 57% of consumer credit card applications were made via online or mobile channels in 2024[80]. - 75% of consumer credit card accounts with an outstanding balance had activated digital account servicing capabilities[80]. - The Digital sales platform has established new partnerships, including Virgin Red in 2024[35]. - The integration of technology with partners enables customers to "apply and buy" at the point-of-sale, enhancing transaction efficiency[76]. Partnerships and Business Model - The company maintains longstanding relationships with its five largest partners, each lasting over 10 years, with Lowe's being a partner for 45 years[31]. - The company’s business model aligns its interests with those of its partners, providing substantial value and promoting customer loyalty[25]. - The company completed the acquisition of Ally Financial Inc.'s point-of-sale financing business in March 2024, enhancing its presence in the home improvement sector[29]. - The company operates through five sales platforms: Home & Auto, Digital, Diversified & Value, Health & Wellness, and Lifestyle, which are aligned with the types of partners it works with[26]. Credit Products and Risk Management - The company offers a diverse range of credit products, including private label, dual, co-brand, and general purpose credit cards, as well as installment loans and consumer banking products[24]. - The company employs a proprietary Quickscreen acquisition method, significantly outperforming traditional direct-to-consumer channels[70]. - The company has developed proprietary credit tools called Synchrony PRISM to enhance credit risk management and customer insights[115]. - The company manages credit risk across approximately 117 million open accounts as of December 31, 2024, ensuring diversification without significant individual exposures[114]. Employee and Operational Insights - The company has over 20,000 full-time employees, with a workforce that is 61% female and 38% male as of December 31, 2024[129]. - The company plans to increase the minimum wage to $21.50 per hour for all hourly employees in the United States effective March 1, 2025[130]. - The efficiency ratio improved to 30.0% in 2024, down from 34.9% in 2023, indicating better operational efficiency[156]. Market Position and Competition - The company competes with major financial institutions and fintech companies for consumer credit programs, emphasizing technological capabilities and service levels[134]. - The company aims to differentiate its deposit products based on brand, reputation, convenience, customer service, and value[112]. - The company continues to focus on acquiring small to mid-sized commercial customers through private label credit cards and Dual Cards[86]. Asset and Deposit Growth - The company had $82.1 billion in total deposits, with $72.3 billion from direct deposits and $9.8 billion from brokered deposits, representing 84% of total funding sources[108]. - Total assets rose to $119,386 million in 2024, up from $109,819 million in 2023, reflecting an increase of 8.5%[156]. - Deposits grew to $82,656 million in 2024, compared to $75,889 million in 2023, marking an increase of 9.4%[156]. Interest and Fee Trends - Interest and fees on loans increased by 8.5% in 2024, driven by loan receivables growth and product changes[167]. - Home & Auto interest and fees on loans increased by $507 million, or 9.6%, for the year ended December 31, 2024, driven by higher average loan receivables and higher benchmark rates[207]. - Digital interest and fees on loans increased by $392 million, or 6.7%, for the year ended December 31, 2024, driven by higher average loan receivables, lower payment rates, and higher benchmark rates[209]. - Diversified & Value interest and fees on loans increased by $261 million, or 5.8%, for the year ended December 31, 2024, driven by growth in average loan receivables, lower payment rates, and higher benchmark rates[211]. - Health & Wellness interest and fees on loans increased by $440 million, or 13.6%, for the year ended December 31, 2024, primarily driven by higher average loan receivables[213].

Group 1 - Synchrony Financial reported Q4 results that fell below expectations, leading to a slight pullback in its stock price [1] - The stock had performed exceptionally well since the U.S. Presidential election, as investors anticipated a more favorable regulatory environment [1] - There is ongoing uncertainty regarding the Consumer Financial Protection Bureau (CFPB) [1]

Core Viewpoint - Synchrony Financial is under investigation for potential securities fraud and unlawful business practices following disappointing financial results for Q4 2024, which led to a significant drop in stock price [1][2][3]. Financial Performance - Synchrony reported its Q4 2024 earnings on January 28, 2025, which missed consensus estimates due to weaker-than-expected net interest income [2]. - The company's provision for credit card losses exceeded analyst expectations, indicating potential issues in credit quality [2]. - The net charge-off rate increased, further raising concerns about the company's financial health [2]. Market Reaction - Following the announcement of the disappointing financial results, Synchrony's stock price experienced a sharp decline during intraday trading on January 28, 2025 [3].

Group 1: Momentum Investing Overview - Momentum investing involves following a stock's recent trend, with the strategy of buying high and selling higher, capitalizing on established price movements [1] - The Zacks Momentum Style Score helps define momentum characteristics, with Synchrony (SYF) currently holding a Momentum Style Score of B [2] Group 2: Synchrony (SYF) Performance Metrics - SYF shares have increased by 2.73% over the past week, outperforming the Zacks Financial - Miscellaneous Services industry, which rose by 0.1% [5] - Over the last month, SYF's price change is 6.47%, significantly better than the industry's 0.88% [5] - In the last quarter, SYF shares rose by 7.47%, and over the past year, they have surged by 79.93%, while the S&P 500 increased by only 4.7% and 24.79% respectively [6] Group 3: Trading Volume and Earnings Outlook - SYF's average 20-day trading volume is 3,096,775 shares, indicating a bullish sign if the stock is rising with above-average volume [7] - In the past two months, 6 earnings estimates for SYF have been revised upwards, increasing the consensus estimate from $6.41 to $6.95 [9] - For the next fiscal year, 4 estimates have moved up while 1 has been revised down [9] Group 4: Overall Assessment - SYF is rated as a 2 (Buy) stock with a Momentum Score of B, indicating strong potential for near-term gains [11]

Core Insights - The article compares Synchrony (SYF) and SoFi Technologies, Inc. (SOFI) to determine which stock is a better undervalued investment option for investors in the Financial - Miscellaneous Services sector [1] Valuation Metrics - Synchrony has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision trend compared to SoFi, which has a Zacks Rank of 3 (Hold) [3] - SYF's forward P/E ratio is 9.99, significantly lower than SOFI's forward P/E of 59.09, suggesting SYF is more attractively priced [5] - SYF has a PEG ratio of 0.78, while SOFI's PEG ratio is 2.21, indicating SYF's expected earnings growth is more favorable relative to its valuation [5] - SYF's P/B ratio is 1.76, compared to SOFI's P/B of 2.91, further supporting SYF's valuation advantage [6] Value Grades - SYF has earned a Value grade of A, while SOFI has received a Value grade of F, highlighting the significant difference in their valuation metrics [6] - The stronger estimate revision activity and more attractive valuation metrics for SYF suggest it is the superior option for value investors at this time [7]

When I covered Synchrony Financial (NYSE: SYF ) last quarter, I noted the stock was not too expensive despite trading at what were then all-time highs. This turned out toI retired early after 22 years in the energy industry with roles in engineering, planning, and financial analysis. I have managed my own portfolio since 1998 and have met my goal to match the S+P 500 return over the long term with lower volatility and higher income. I mostly write on positions I already hold or am considering changing. I pr ...

NEW YORK, Jan. 28, 2025 /PRNewswire/ -- Pomerantz LLP is investigating claims on behalf of investors of Synchrony Financial ("Synchrony" or the "Company") (NYSE: SYF). Such investors are advised to contact Danielle Peyton at [email protected] or 646-581-9980, ext. 7980.The investigation concerns whether Synchrony and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices. [Click here for information about joining the class action]On January 28, 2025, S ...

Synchrony Financial (SYF) reported fourth-quarter 2024 adjusted earnings per share (EPS) of $1.91, which beat the Zacks Consensus Estimate of $1.90. The bottom line also increased from $1.03 per share a year ago.See the Zacks Earnings Calendar to stay ahead of market-making news. Net interest income improved 2.7% year over year to $4.6 billion in the fourth quarter. However, it missed the consensus mark by a whisker.The strong quarterly earnings were supported by increased interest and fees on loans and an  ...