Synchrony Financial SYF is well-poised to grow on the back of rising net interest income, expanding average loan receivables, and lower delinquencies. However, softer consumer spending might act as a partial offset.
Synchrony Financial — with a market cap of $19.9 billion — is a premier consumer financial services company that offers a wide range of credit products. Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth retaining in your portfolio at the moment.
SYF’s Year-to-Date Price Performance
Shares of Synchrony Financial have soared 31.6% in the year-to-date period, outperforming the industry, sector, and the S&P 500 Index’s 7.4%, 15.1%, and 18.4% growth, respectively. Currently priced at $50.26, the stock is below its 52-week high of $52.67. This proximity underscores investor confidence and market optimism about this company’s prospects despite a slowdown in consumer spending. It has the ingredients for further price appreciation.
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Key Risks
However, there are a few factors that investors should keep an eye on.
The company expects purchase volumes to decline flat to low single-digit year over year in the second half of 2024. Even though it expects the net charge-off rate in the second half to be lower than the first half of 2024, the metric is going to be worse than the previous year's figure of 4.87%. Nevertheless, we believe that a systematic and strategic plan of action will drive SYF’s growth in the long term.
Stocks to Consider
Investors interested in the broader Finance space may look at some better-ranked players like Aflac Incorporated AFL, Brown & Brown, Inc. BRO and Arthur J. Gallagher & Co. AJG. Each stock presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Aflac’s current-year earnings is pegged at $6.73 per share, which indicates 8% year-over-year growth. It witnessed seven upward estimate revisions in the past 30 days against no downward movements. AFL beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 8.2%.
The Zacks Consensus Estimate for Brown & Brown’s 2024 earnings indicates 31% year-over-year growth. During the past two months, BRO has witnessed six upward estimate revisions against none in the opposite direction. It beat earnings estimates in each of the past four quarters, with an average surprise of 9.8%.
The Zacks Consensus Estimate for Arthur J. Gallagher’s current-year earnings suggests a 16% year-over-year jump. During the past two months, AJG has witnessed six upward estimate revisions against none in the opposite direction. The consensus mark for current-year revenues indicates 14.5% growth from a year ago.
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Aflac Incorporated (AFL): Free Stock Analysis Report
Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report
Brown & Brown, Inc. (BRO): Free Stock Analysis Report
Synchrony Financial (SYF): Free Stock Analysis Report