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Monday, January 18, 2021

Synchrony Financial (NYSE:SYF) Regains it’s Footing

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Synchrony Financial (NYSE:SYF) appears to be firming up near a major support zone after a late April sell off on their Q1 earnings report. SYF is a consumer financial services company, with roots in consumer finance back to 1932, and are the largest provider of private label credit cards in the United States. Shares have had a rocky road so far in 2017, trading lower from the $38 level mostly due to the recent earnings report where they missed numbers.

SYF is a Large-cap (valued at a $22 billion dollar market cap), and as you can see below, shares have had a tough go this year with the sharp selloff post earnings in late April. on April 28th SYF reported 1st quarter 2017 non-GAAP earnings of $0.61 per share. This result missed the $0.73 consensus expectations of the 24 analysts following the company and missed last year’s 1 quarter results by 12.86%.

A look at the price action in the chart below has investors looking ahead to better results for quarters ahead. Synchrony made some important adjustments raising the dividend and activating a share buyback program. This normally keeps retail and institutional investors around as they spend money repairing the balance sheet.

Synchrony Financial (NYSE:SYF) provides a range of credit products through programs established with national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers to help generate growth for partners and offer financial flexibility to customers. The customer base is in over 365,000 locations across the United States and Canada. Synchrony Financial offers private label and co-branded Dual Card credit cards, promotional financing and installment lending, loyalty programs and FDIC-insured savings products.

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They also announced at the recent Board meeting they raised the quarterly cash dividend to $0.15 per share of common stock, commencing the third quarter of 2017, and has approved a share repurchase program of up to $1.64 billion through June 30, 2018. The company expects to make share repurchases from time to time subject to market conditions and other factors, including legal and regulatory restrictions and required approvals.

A good example of what they do is the recent deal with Zulily, llc. For the first-time, Zulily will launch a private label credit card program allowing its customers to purchase the merchandise which they visit and shop for every day.

Synchrony Financial has also renewed the consumer financing program for QVC, a leading global multiplatform retailer. Both QVC and Zulily are wholly owned subsidiaries of Liberty Interactive Corporation. The launch of the Zulily credit card is expected in late 2017 or early 2018, and will provide millions of customers an additional payment option with added value to cardholders. Additionally, QVC’s QCard card holders will be able to use their card to make purchases on Zulily.

“We strive to deliver an exceptional customer experience and constantly innovate to enhance our customer experience. With over 90% of purchases coming from existing customers*, we believe they will be delighted with a new financing option that provides added value to their daily shopping experience,” said Darrell Cavens, President and CEO of zulily. “We’re partnering with one of the largest customer driven credit card issuers in the country, and we look forward to leaning into Synchrony Financial’s extensive expertise to drive this program for the business as well as provide a compelling customer benefit.”

“We’re excited to work with a leading retailer like zulily,” said Tom Quindlen, executive vice president and CEO, Retail Card, Synchrony Financial. “zulily has demonstrated its ability to engage and captivate its customers. We look forward to launching a strong credit card program and working with QVC and zulily to develop and grow both programs.”

As we highlighted Synchrony Financial (NYSEMKTS:SYF) is a large company who’s not new to what Wall Street needs from the balance sheet. SYF is pulling the financial levers it needs to make adjustments and adapt to the changing consumer demand for credit, again this is not their first rodeo.

To sum up – We rarely write about large companies like SYF, but as an investor in smaller stocks we need to pay attention to quarterly failures by consumer stocks that are honed specifically to judge the credit demand cycle for business. This is an excellent stock to watch for just that. For continuing coverage on shares of $SYF stock, as well as our other hot stock picks, sign up for our free newsletter today and get our next hot stock pick!

 

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