Synchrony Financial (SYF) reported impressive earnings and revenues for the second quarter of FY2022. Despite the beat, shares of the company closed flat at $31.48 on July 19.
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Synchrony Financial is a U.S.-based consumer financial services company that offers consumer financing and consumer banking products across industries like digital, retail, home, auto, travel, health, and pets.
SYF’s Q2 Beat
Synchrony reported quarterly earnings of $1.60 per share, significantly higher than analysts’ estimates of $1.44 per share. However, it was lower than the earnings of $2.12 per share reported for the prior-year period.
Revenues jumped 19.6% year-over-year to $2.8 billion and exceeded consensus estimates by $130 million.
Positively, net interest margin climbed to 15.60% in the quarter, up 182 basis points from the year-ago period.
Furthermore, the company reported loans of $83.4 billion, up from $76.8 billion in the prior-year quarter. Similarly, average active accounts surged 4.3% to 68.67 billion, compared to 65.81 million for the prior-year period.
Wall Street’s Take on SFY
Following the quarterly beat, Credit Suisse analyst Moshe Orenbuch increased its price target on Synchrony Financial to $47 (49.3% upside potential) from $46 and reiterated a Buy rating.
The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 11 Buys and five Holds. The average Synchrony Financial price target of $46.81 implies 16.9% upside potential to current levels.
High Smart Score for SYF
SYF scores a 9 out of 10 on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
Bottom-Line
Shares of SYF have lost about a third of their market capitalization over the past six months.
Strong loan growth as well as credit card metrics with low levels of net charge-off and delinquency rates reflect robust credit trends. This surely alleviates investor concerns and bodes well for the stock in the coming months.
