Synchrony (SYF) Up 5% Since Last Earnings Report: Can It Continue?

Core Insights - Synchrony Financial reported strong Q3 2025 earnings, with adjusted EPS of $2.86, exceeding estimates by 28.8% and showing a year-over-year increase of 47.4% [2][3] - The company experienced a 2.4% year-over-year growth in net interest income, totaling $4.7 billion, which also surpassed consensus estimates [2][3] Financial Performance - Improved purchase volume, net interest margin, and increased interest and fees on loans contributed to the strong quarterly results [3] - Total loan receivables decreased by 2% year-over-year to $100.2 billion, missing the consensus estimate of $100.3 billion [4] - Total deposits fell by 2% year-over-year to $79.9 billion, below the estimate of $83 billion [5] - Provision for credit losses was $1.1 billion, down 28.2% year-over-year, lower than the estimate of $1.5 billion [5] Purchase Volume and Loan Receivables - Synchrony's purchase volume rose by 2.3% year-over-year to $46 billion, driven by improved consumer spending [5] - Interest and fees on loans totaled $5.5 billion, slightly down by 0.2% year-over-year, missing estimates by 0.4% [6] - Average active accounts decreased by 3% year-over-year to 68.3 million, missing estimates [7] Segment Performance - Home & Auto loan receivables decreased by 6.3% year-over-year, with purchase volume down 1.4% [8] - Digital loan receivables increased by 1.5% year-over-year, with purchase volume up 5.2% [9] - Health & Wellness loan receivables inched up by 0.1% year-over-year, with purchase volume rising by 2.8% [11] - Lifestyle loan receivables decreased by 2.7% year-over-year, with purchase volume falling by 2.8% [12] Financial Position - As of September 30, 2025, Synchrony had cash and equivalents of $16.2 billion, up from $14.7 billion at the end of 2024 [13] - Total assets decreased to $117 billion from $119.5 billion at the end of 2024 [13] - Total equity increased to $17.1 billion from $16.6 billion at the end of 2024 [13] Capital Deployment - Synchrony returned $861 million through share buybacks and paid $110 million in dividends during Q3 [15] - The company has a remaining capacity of approximately $2.1 billion under its share buyback authorization [15] Guidance and Outlook - The company expects flat period-end loan receivables and net revenues between $15 billion and $15.1 billion, below previous expectations [16] - Management projects net charge-offs between 5.6% and 5.7%, with an efficiency ratio expected to remain between 33% and 33.5% [17] - Synchrony holds a Zacks Rank 3 (Hold), indicating an expectation of in-line returns in the coming months [21]