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Is Synchrony (SYF) Stock Undervalued Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is Synchrony (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 7.53. This compares to its industry's average Forward P/E of 10.67. Over the past 52 weeks, SYF's Forward P/E has been as high as 9.31 and as low as 5.19, with a median of 7.51.

SYF is also sporting a PEG ratio of 0.98. 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 PEG compares to its industry's average PEG of 1.22. Over the last 12 months, SYF's PEG has been as high as 1.03 and as low as 0.49, with a median of 0.79.

We should also highlight that SYF has a P/B ratio of 1.59. 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 2. Within the past 52 weeks, SYF's P/B has been as high as 1.84 and as low as 1.14, with a median of 1.56.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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 1.27. This compares to its industry's average P/S of 1.8.

Finally, our model also underscores that SYF has a P/CF ratio of 6.71. 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. This stock's P/CF looks attractive against its industry's average P/CF of 9.26. SYF's P/CF has been as high as 11.51 and as low as 5.47, with a median of 7.40, all within the past year.

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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