Can Synchrony Beat Q4 Earnings Estimates on Improving Efficiency?

Earnings Report and Estimates - Synchrony Financial (SYF) is set to report Q4 2024 results on Jan 28, 2025, with a Zacks Consensus Estimate of $1.90 EPS and $4.57 billion in revenues [1] - The Q4 earnings estimate has increased by 2 cents over the past month, indicating an 84.5% YoY increase, while revenue estimates suggest a 2.2% YoY growth [2] - For the full year, the Zacks Consensus Estimate for revenues is $17.98 billion, a 5.4% YoY rise, and EPS is $6.54, implying a 26% YoY jump [3] - SYF has beaten earnings estimates in three of the last four quarters, with an average surprise of 4.5% [3] Factors Influencing Q4 Results - SYF is expected to benefit from increased loan receivables, improved efficiency ratio, and growth in average active accounts [5] - Net interest income is projected to grow 3.4% YoY, with interest and fees on loans expected to rise to over $5.5 billion from $5.3 billion a year ago [5] - Digital sales volume and total average active accounts are likely to have risen more than 2% YoY in Q4 [6] - Average Interest-Earning Assets are expected to increase by 6.5% YoY, and the efficiency ratio is estimated at 34.80%, improving from 36% a year ago [7] Challenges and Offsets - SYF is expected to face increased costs in information processing, employee expenses, and professional fees, along with lower purchase volumes [8] - Total purchase volumes for Q4 are estimated to decline nearly 3% YoY, with a volatile economic environment potentially discouraging big-ticket transactions [9] - Net interest margin is projected at 14.73%, down from 15.10% a year ago, and net charge-offs are likely to have risen substantially [10] Other Companies with Earnings Potential - Rithm Capital Corp (RITM) has an Earnings ESP of +2.22% and a Zacks Rank 1, with Q4 earnings estimated at 45 cents per share and revenues at $1.23 billion, a 73.2% YoY growth [11][12] - Bread Financial Holdings (BFH) has an Earnings ESP of +25.94% and a Zacks Rank 2, with Q4 earnings estimated at 34 cents per share, up 4 cents in the past month, and an average earnings surprise of 70.2% in the past four quarters [12][13] - OneMain Holdings (OMF) has an Earnings ESP of +1.93% and a Zacks Rank 3, with Q4 earnings estimated at $1.12 per share and an average earnings surprise of 7% in the past four quarters [13][14]