Synchrony Financial (SYF) Third Quarter Profit Estimates Surpass Estimates, Up Y / Y
Synchrony Financial SYF reported third quarter 2021 earnings per share of $ 1.67, beating Zacks’ consensus estimate by 12.1%. The bottom line has more than doubled year over year.
The Company’s results benefited from solid growth in new accounts, higher purchase volume and lower expenses.
Results in detail
The company’s net interest income increased 5.8% year-over-year to $ 3.7 billion in the quarter under review, on higher interest and loan charges.
Other income of $ 94 million was down 28.2% year-over-year due to higher program loyalty costs resulting from increased purchasing volume.
In the third quarter, loan receivables fell 2.7% year-over-year to $ 76.4 billion.
Deposits amounted to $ 60.4 billion, reflecting a 4.9% year-over-year decline.
The allowance for credit losses fell 97.9% year-over-year to $ 25 million due to reduced reserves and net write-offs.
Total other expenses of $ 961 million decreased 9.9% year-on-year in the current quarter, due to reduced operating losses.
Synchrony’s financial price, consensus and EPS surprise
Synchrony Financial price-consensus-eps-surprise-chart | Synchrony Financial Quote
Update of sales platforms
Home and automobile end-of-period loan receivables increased 2% year-on-year in the third quarter. Purchasing volume improved 10% year-over-year thanks to the strong and consistent performance of the majority segments of the industry. Interest and charges on loans have remained stable year over year.
Digital loans receivable increased 4% year-on-year. Meanwhile, purchasing volume grew 21% year-over-year thanks to strong digital partners. Interest and charges on loans increased 6% year-over-year.
Diversified & Value period end loan receivables decreased 3% year over year due to higher repayment rates. Purchasing volume improved 25% year-on-year during the quarter under review. Interest and charges on loans were down 4% year-on-year.
Health end-of-period loan receivables increased 5% year-on-year while purchasing volume grew 10% year-on-year, highlighting increased consumer confidence in the continuation of planned proceedings. Interest and charges on loans increased 6% year-over-year.
Way of life end-of-period loan receivables improved 8% year-on-year in the third quarter, on the strength of powersports. Purchase volume increased 2% year over year. Interest and charges on loans increased 4% year over year.
Financial situation (as of September 30, 2021)
The company left the third quarter with total assets of $ 91.9 billion, down 3.9% year-over-year.
Total borrowing of $ 12.8 billion fell 19.1% year-on-year in the quarter under review.
The company’s balance sheet has been consistently strong this quarter, with total cash of $ 18.4 billion representing 20% of its total assets.
Return on assets and return on equity were 4.9% and 32.1%, respectively, for the third quarter.
The efficiency ratio contracted 100 basis points year over year to 38.7%.
Deployment of capital
During the third quarter, Synchrony Financial repaid $ 1.4 billion of capital in the form of share buybacks of $ 1.3 billion and common stock dividends of $ 124 million.
Synchrony Financial carries a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
Here are a few companies in the financial sector that are worth considering, as our model shows that they have the right mix of elements to beat profits in this reporting cycle:
Houlihan Lokey, Inc. HLI has an ESP on earnings of + 6.67% and a Zacks rank of 1. You can discover the best stocks to buy or sell before they are flagged with our ESP on earnings filter.
The Carlyle Group Inc. CG has + 6.38% revenue ESP and Zacks # 2 rank.
Capital One Financial Corporation COF has + 5.10% earning ESP and Zacks # 2 rank.
Zacks’ top picks for leveraging artificial intelligence
By 2021, this world-changing technology is expected to generate $ 327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban has said AI will create “the world’s first trillionaires.” Zacks’ Urgent Special Report Reveals 3 AI Choices Investors Need To Know Today.
See 3 artificial intelligence stocks with extreme upside potential >>
Click to get this free report
Capital One Financial Corporation (COF): Free share analysis report
Carlyle Group Inc. (CG): Free Stock Analysis Report
Synchrony Financial (SYF): Free Stock Analysis Report
Houlihan Lokey, Inc. (HLI): Free Stock Analysis Report
To read this article on Zacks.com, click here.
Zacks investment research
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.