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Is Synchrony (SYF) a Great Value Stock Right Now?

Zacks Equity Research

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Synchrony (SYF). SYF is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 7.41. This compares to its industry's average Forward P/E of 10.28. Over the past year, SYF's Forward P/E has been as high as 10.42 and as low as 5.19, with a median of 7.86.

SYF is also sporting a PEG ratio of 0.83. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SYF's PEG compares to its industry's average PEG of 1.19. Over the past 52 weeks, SYF's PEG has been as high as 1.36 and as low as 0.49, with a median of 0.78.

Another valuation metric that we should highlight is SYF's P/B ratio of 1.61. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.81. SYF's P/B has been as high as 1.99 and as low as 1.14, with a median of 1.61, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SYF has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.83.

These are only a few of the key metrics included in Synchrony's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SYF looks like an impressive value stock at the moment.


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