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Synchrony Financial (SYF) Q4 Earnings Top Mark, Rise Y/Y

Zacks Equity Research

Synchrony Financial’s SYF fourth-quarter 2019 earnings per share of $1.10 beat the Zacks Consensus Estimate by 1.9%. The bottom line also improved 0.9% year over year on the back of higher other income. The company’s Payments Solution and CareCredit segments also contributed to its results. This excludes the impact of the Walmart portfolio.

Results in Detail

The company’s net interest income decreased 7% to $4 billion in the fourth quarter due to the impact of the Walmart consumer portfolio sale.

Moreover, the company’s other income soared 63% to $104 million, mainly attributable to lower loyalty program expenses.

In the quarter under review, loan receivables declined 6% year over year.

Deposits were $65.1 billion, up 2% from the year-ago quarter.

Provision for loan loss plunged 24% year over year to $1.1 billion on the back of lower core business development and information processing along with other expenses.

Total other expenses are flat at $1.1 billion with the year-ago reported results.

Synchrony Financial Price, Consensus and EPS Surprise

Synchrony Financial Price, Consensus and EPS Surprise
Synchrony Financial Price, Consensus and EPS Surprise

Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote

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Sales Platforms Update

Retail Card

The company’s interest and fees on loans fell 10% year over year due to the sale of the Walmart consumer portfolio.

Loan receivables were down 12% while the average active accounts declined 7%.

Payment Solutions

Interest and fees on loans rose 4% year over year on the back of loan receivables growth. Loan receivables augmented 4% including the impact of the reclassification of the Yamaha portfolio to loan receivables held for sale.

Purchase volume expanded 6% while average active account rose 3%.

CareCredit

Interest and fees on loans increased 9% year over year, attributable to higher loans receivables.

While purchase volume registered 12% growth, the average active account reported a 5% rise.

Financial Position

Total assets as of Dec 31, 2019 were $104.8 billion, down 1.8% from the level as of Dec 31, 2018.

Total borrowings as of fourth-quarter 2019 end were $19.9 billion, down 17.2% from 2018-end level.

The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $23.4 billion reflecting 22.3% of the total assets.

While return on assets was 2.7%, the return on equity was 19%.

Efficiency ratio was 34.8% in the fourth quarter of 2019.

Capital Deployment

During the quarter under consideration, the company purchased shares worth $1.4 billion and paid out a dividend of 22 cents per share.

Rank

Synchrony Financial carries a Zacks Rank #3 (Hold).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Upcoming Releases From Finance Sector

Some stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

AXA Equitable Holdings, Inc. EQH is slated to announce fourth-quarter earnings on Feb 27. The stock has an Earnings ESP of +2.68% and a Zacks Rank #2 (Buy).

Moody's Corporation MCO has an Earnings ESP of +1.00% and a Zacks Rank of 2. The company is scheduled to release fourth-quarter earnings on Feb 12.

ProAssurance Corporation PRA is set to report fourth-quarter earnings on Feb 20. The stock is Zacks #2 Ranked and has an Earnings ESP of +36.71%.

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Moody's Corporation (MCO) : Free Stock Analysis Report
 
Synchrony Financial (SYF) : Free Stock Analysis Report
 
ProAssurance Corporation (PRA) : Free Stock Analysis Report
 
AXA Equitable Holdings, Inc. (EQH) : Free Stock Analysis Report
 
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