Synchrony Financial, originally a spinoff of GE Capital's retail financing business, is the largest provider of private-label credit cards in the United States by both outstanding receivables and purchasing volume. Synchrony partners with other firms to market its credit products in their physical stores as well as on their websites and mobile applications. Synchrony operates through three segments: retail card (private-label and co-branded general-purpose credit cards), payment solutions (promotional financing for large ticket purchases), and CareCredit (financing for elective healthcare procedures).
Buy
Synchrony specializes in private-label credit cards, Buy Now Pay Later (BNPL) solutions, and financing through brands like CareCredit, PayPal, and Amazon. With 73.5 million active accounts, it reported $17.43 billion in revenue (up 22.58%) and $2.24 billion in net income for 2024.
Undervaluation: SYF trades at a P/E ratio of 6.2x, significantly below the financial services industry average (~12x). Its intrinsic value is estimated at $118.05, suggesting a 62% undervaluation at ~$56.55 (as of April 16, 2025).
Strong Financials: Q4 2024 EPS was $1.91, meeting estimates, with a 24% return on equity. Analysts forecast FY2025 EPS at $7.60, up from $7.03, supported by robust revenue growth and stable credit metrics (6.5% net charge-off rate).
Growth Drivers: Synchrony’s digital platforms and partnerships (e.g., Amazon, PayPal) drive receivables growth, while BNPL and CareCredit tap into high-demand sectors. A $1.5 billion share repurchase program enhances shareholder value.
Analyst Optimism: Of 22 analysts, 14 rate SYF a “Buy” or “Strong Buy,” with an average 12-month price target of $68.25, implying ~20.7% upside. BofA Securities set a $65 target, citing resilience in consumer spending.
Dividend Yield: SYF offers a 1.89% dividend yield ($1.04 annually), appealing for income investors, with a low payout ratio (~14%) supporting future increases.