Will Lower Active Accounts Impact Synchrony's Q4 Earnings Potential?

Core Viewpoint - Synchrony Financial (SYF) is expected to report its fourth-quarter 2025 results on January 27, with earnings estimated at $2.02 per share and revenues at $4.79 billion, indicating a year-over-year growth in earnings of 5.8% and revenue growth of 4.3% [1][2]. Financial Performance Estimates - The full-year 2025 revenue estimate for Synchrony is $17.92 billion, reflecting a slight decline of 0.5% year-over-year, while the EPS for the current year is projected at $9.25, representing a significant increase of approximately 40.4% year-over-year [3]. - Synchrony has consistently exceeded earnings estimates in the past four quarters, with an average surprise of 22.67% [3]. Earnings Prediction Insights - The current model indicates uncertainty regarding an earnings beat for Synchrony, as it has an Earnings ESP of -0.60% and a Zacks Rank of 3 (Hold) [4]. - Factors contributing to the fourth-quarter results include increased net interest margin, higher purchase volumes, and a decrease in net charge-offs, which are expected to support year-over-year growth [5][7]. Key Financial Metrics - The estimated interest and fees on loans for the quarter are projected at $5.6 billion, slightly up from $5.5 billion a year ago, with a net interest margin consensus of 15.72%, an increase from 15.01% the previous year [6]. - The net charge-offs ratio is expected to be 5.41, down from 6.45 a year ago, indicating improved credit quality [7]. - However, the company is anticipated to face challenges from increased employee costs and a nearly 2% decline in average active accounts [5][8]. Comparative Analysis - While Synchrony faces uncertainty regarding its earnings beat, other companies in the finance sector, such as Barclays PLC and Cboe Global Markets, show promising earnings potential with positive Earnings ESPs and favorable Zacks Ranks [9][10][11].