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Stamford, Connecticut-based Synchrony Financial (SYF) is a premier consumer financial services company delivering one of the industry's most complete digitally-enabled product suites. Valued at $25.1 billion by market cap, the company provides a range of credit products such as credit cards, commercial credit products, and consumer installment loans through programs established with a diverse group of national and regional retailers, local merchants, manufacturers, and more.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and SYF perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the credit services industry. SYF's market leadership is fueled by its vast partner network, comprising national retailers, local merchants, and healthcare providers, paired with a robust digital platform. This digital focus aligns with consumer trends and enhances customer engagement.
Despite its notable strength, SYF shares have slipped 15.2% from their 52-week high of $88.77, achieved on Jan. 9. Over the past three months, SYF stock has gained 17.6%, outperforming the S&P 500 Index’s ($SPX) 11.8% gains during the same time frame.
Shares of SYF fell 9.8% this year but climbed 22.9% over the past 52 weeks, underperforming SPX’s YTD gains of 9.7% and 25.6% returns over the same time frame.
To confirm the bullish trend, SYF has been trading above its 50-day and 200-day moving averages recently.
SYF underperformed as rising charge-offs hit consumer lenders when pandemic savings dried up and persistent inflation strained lower-income borrowers. Synchrony responded by tightening underwriting standards, pressuring the stock.
On Apr. 21, SYF shares closed down more than 1% after reporting its Q1 results. Its EPS of $2.27 met Wall Street expectations. The company’s net interest income was $4.6 billion, up 3.8% year over year.
In the competitive arena of credit services, American Express Company (AXP) has taken the lead over SYF, showing resilience with a 7.9% downtick on a YTD basis but lagged behind the stock with 15.8% gains over the past 52 weeks.
Wall Street analysts are moderately bullish on SYF’s prospects. The stock has a consensus “Moderate Buy” rating from the 23 analysts covering it, and the mean price target of $89.41 suggests a potential upside of 18.8% from current price levels.
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