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Synchrony Financial (SYF) Up 177% in a Year: More Room to Run?

Synchrony Financial SYF has emerged as an investor favorite stock on the back of its strategic initiatives.

Over the past seven days, the company has witnessed its 2021 and 2022 earnings estimates move 0.4% and 0.2% north, respectively. This instills investors' confidence in the stock.

In the past year, shares of this currently Zacks Rank #2 (Buy) company have gained 177.4%, outperforming its industry’s growth of 23.7%.


Companies in the same space, such as Jefferies Financial Group Inc. JEF, American Express Company AXP and Discover Financial Services DFS have also soared 128.6%, 65.2% and 180.9%, respectively, in the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

As a leading card issuer, inorganic story has always been one of its key growth trajectories. It frequently resorts to alliances and buyouts to enhance its capabilities and diversify its business profile. The company is actively expanding its collaborations to boost its portfolio. Apart from tying up with biggies, it even became the card issuer of Walgreens’ co-branded credit card program in the United States.

Synchrony Financial also revised its relationship with Mattress Firm. It even reached an agreement to buy Allegro Credit, a leading provider of point-of-sale consumer financing for audiology products and dental services.
It’s needless to say that additional financing options aid people in taking informed and faster decisions about choosing treatment options per the needs of their families.

The company has been witnessing revenue strength since 2013 owing to its rising interest income. Although the same suffered the pandemic blow partially, we expect its total interest income to bounce back on the backs of CareCredit network expansion, strategic initiatives and digital capabilities.

Another factor that should be noted in this regard is its restructuring measures. The company invested $89 million in the third quarter of 2020.  Last year, it managed to decrease 4.5% of its costs year over year on the back of lower purchase volume, reduced employee costs, etc. The streamlining initiative is expected to decline expenses by around $210 million during 2021. Management expects to continue with its cost-saving efforts even more after 2021.

Further Upside Left?

We believe that the company is well-poised for growth on the back of various strategic actions.

The stock carries an impressive VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.  

The Zacks Consensus Estimate for the company’s 2021 earnings indicates an improvement of 121.6% from the year-ago reported figure.

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