Are Investors Undervaluing Synchrony Financial (SYF) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Synchrony Financial (SYF). SYF is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.20. This compares to its industry's average Forward P/E of 11.96. SYF's Forward P/E has been as high as 7.56 and as low as 5.05, with a median of 6.48, all within the past year.
We also note that SYF holds a PEG ratio of 1.40. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SYF's PEG compares to its industry's average PEG of 1.44. Over the last 12 months, SYF's PEG has been as high as 1.78 and as low as 0.22, with a median of 1.38.
Another notable valuation metric for SYF is its P/B ratio of 1.08. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. SYF's current P/B looks attractive when compared to its industry's average P/B of 3.20. Over the past year, SYF's P/B has been as high as 1.48 and as low as 0.92, with a median of 1.15.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SYF has a P/S ratio of 0.71. This compares to its industry's average P/S of 1.6.
These are just a handful of the figures considered in Synchrony Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that SYF is an impressive value stock right now.
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