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What to Expect From Synchrony Financial's (SYF) Q1 Earnings

Synchrony Financial SYF is set to report first-quarter 2022 results on Apr 18, before the opening bell.

The consumer financial services company reported an adjusted earnings of $1.48 per share for the fourth quarter, beating the Zacks Consensus Estimate of $1.47 on the back of solid growth in new accounts and a higher purchase volume. It also gained from growing contributions from Home & Auto, Digital, Diversified & Value, Health & Wellness, and Lifestyle businesses, partly offset by steep expenses.

Let’s see how things have shaped up prior to the first-quarter earnings announcement.

Trend in Estimate Revision

The Zacks Consensus Estimate for first-quarter earnings per share of $1.51 suggests a 12.7% increase from the prior-year figure of $1.73. Two upward estimate revisions have been witnessed by the company in the past week compared to three in the opposite direction. The consensus estimate for first-quarter revenues of $3.8 billion indicates a 9.1% increase from the year-ago reported figure.

Synchrony Financial beat the consensus estimate for earnings in each of the prior four quarters, with the average being 18.1%. This is depicted in the graph below:

Synchrony Financial Price and EPS Surprise

Synchrony Financial Price and EPS Surprise
Synchrony Financial Price and EPS Surprise

Synchrony Financial price-eps-surprise | Synchrony Financial Quote

Factors to Note

Synchrony Financial is likely to have gained from increased net interest income. The consensus mark for SYF’s interest and fees on loans for the first quarter is pegged at $3,960 million, indicating an increase from $3,732 million a year ago. The Zacks Consensus Estimate for the efficiency ratio is pegged at 38.53%, suggesting an upside from the prior-year reported figure of 36.10%.

Synchrony Financial is expected to have benefited from a better purchase volume as the economy is bouncing back and people are spending more now. The Zacks Consensus Estimate for total purchase volumes for the first quarter indicates an improvement of 14.3% year over year. SYF is expected to have consistently gained from digital sales volume in the to-be-reported quarter.

The financial service provider is expected to have witnessed a decline in total interest-earning assets. The consensus estimate indicates a 2.6% decline in the metric from the year-ago period. The Zacks Consensus Estimate for net charge-offs is pegged at $608 million.

Also, the allowance coverage ratio is expected to decline to 11.09% from 12.54% a year ago. The company is expected to have incurred high marketing and business development costs in the first quarter. Total other expenses are likely to have witnessed significant year-over-year growth and resulted in a decline in the bottom line, making an earnings beat uncertain.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Synchrony Financial this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.

Earnings ESP: The company’s Earnings ESP is -0.25%. This is because the Most Accurate Estimate currently stands lower than the Zacks Consensus Estimate of $1.51.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Synchrony Financial currently carries a Zacks Rank #3.

Stocks to Consider

While earnings beat looks uncertain for Synchrony Financial, here are some companies from the Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

ProAssurance Corporation PRA has an Earnings ESP of +27.54% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for ProAssurance’s bottom line for the to-be-reported quarter indicates an improvement of 325% from the prior-year period. PRA witnessed one upward estimate revision in the past 30 days compared with none in the opposite direction.

Centerspace CSR has an Earnings ESP of +2.51% and is a Zacks #2 Ranked player.

The Zacks Consensus Estimate for Centerspace’s earnings per share for the to-be-reported quarter is pegged at $1.06, implying an 11.6% improvement from the year-ago figure of 95 cents. CSR witnessed one upward estimate revision in the past 30 days compared with none in the opposite direction.

SouthState Corporation SSB has an Earnings ESP of +1.97% and is a Zacks #2 Ranked player.

The Zacks Consensus Estimate for SouthState’s bottom line for the to-be-reported quarter has improved 4.8% in the past 30 days. SSB beat earnings estimates in each of the last four quarters, with an average of 24.7%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.


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ProAssurance Corporation (PRA) : Free Stock Analysis Report

Synchrony Financial (SYF) : Free Stock Analysis Report

SouthState Corp. (SSB) : Free Stock Analysis Report

Centerspace (CSR) : Free Stock Analysis Report

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