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

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Synchrony (SYF) is a stock many investors are watching right now. SYF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 6.93, while its industry has an average P/E of 9.56. Over the past year, SYF's Forward P/E has been as high as 11.72 and as low as 5.19, with a median of 8.50.

We also note that SYF holds a PEG ratio of 0.66. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SYF's industry currently sports an average PEG of 1.03. Over the past 52 weeks, SYF's PEG has been as high as 1.53 and as low as 0.49, with a median of 0.80.

Another valuation metric that we should highlight is SYF's P/B ratio of 1.53. 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. This stock's P/B looks solid versus its industry's average P/B of 1.80. Within the past 52 weeks, SYF's P/B has been as high as 2.18 and as low as 1.14, with a median of 1.69.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SYF has a P/S ratio of 1.19. This compares to its industry's average P/S of 1.77.

Finally, investors should note that SYF has a P/CF ratio of 8.21. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. SYF's P/CF compares to its industry's average P/CF of 11.17. Over the past 52 weeks, SYF's P/CF has been as high as 14.40 and as low as 6.11, with a median of 9.78.

These are just a handful of the figures considered in Synchrony'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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