Synchrony Stock Story

SYF
 Stock
  

USD 35.37  0.11  0.31%   

Whilst many millenniums are getting more into financial services space, it makes sense to digest Synchrony Financial. We will check why this entity may not get much respect from shareholders given the current market uncertainty. Is the entity valuation sustainable? Here I will cover a perspective on valuation of Synchrony to give you a better outlook on taking a position in this stock.
Published over a month ago
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Our prognosis on Synchrony Financial (NYSE:SYF) to bounce back in August

Synchrony Financial has 13.36 B in debt with debt to equity (D/E) ratio of 5.66, demonstrating that Synchrony Financial may be unable to create cash to meet all of its financial commitments. Debt can assist Synchrony Financial until it has trouble settling it off, either with new capital or with free cash flow. So, Synchrony Financial's shareholders could walk away with nothing if the company can't fulfill its legal obligations to repay debt. However, a more frequent occurrence is when companies like Synchrony Financial sell additional shares at bargain prices, diluting existing shareholders. Debt, in this case, can be an excellent and much better tool for Synchrony to invest in growth at high rates of return. When we think about Synchrony Financial's use of debt, we should always consider it together with cash and equity.
The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. Synchrony Financial has an asset utilization ratio of 11.3 percent. This indicates that the company is making $0.11 for each dollar of assets. An increasing asset utilization means that Synchrony Financial is more efficient with each dollar of assets it utilizes for everyday operations.
We determine the current worth of Synchrony Financial using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Synchrony Financial based exclusively on its fundamental and basic technical indicators. By analyzing Synchrony Financial's financials, quarterly and monthly indicators, and related drivers such as dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of Synchrony Financial's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Synchrony Financial. We calculate exposure to Synchrony Financial's market risk, different technical and fundamental indicators, relevant financial multiples and ratios, and then comparing them to Synchrony Financial's related companies.

Synchrony Financial Investment Alerts

Synchrony investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Synchrony Financial performance across your portfolios.Please check all investment alerts for Synchrony

Synchrony Financial Valuation Ratios as Compared to Competition

Our valuation model uses many indicators to compare Synchrony value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Synchrony Financial competition to find correlations between indicators driving the intrinsic value of Synchrony.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions.
It is good to see analyst projects for Synchrony Financial, but it might be worth checking our own buy vs. sell analysis

Details

The entity reported the last year's revenue of 9.49 B. Total Income to common stockholders was 4.09 B with profit before taxes, overhead, and interest of 9.47 B.

Margins Breakdown

Synchrony profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Synchrony Financial itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Synchrony Financial profit margins.
EBITDA Margin0.66
Gross Margin0.89
Profit Margin23.84


Synchrony Financial Net Income Per Employee is rather stable at the moment. Synchrony Financial Net Income Per Employee is rather stable at the moment.

Will Synchrony Financial latest surge continue?

Latest variance is at 10.02. Synchrony Financial exhibits very low volatility with skewness of 0.0 and kurtosis of -0.45. However, we advise investors to further study Synchrony Financial technical indicators to make sure all market info is available and is reliable. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Synchrony Financial's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Synchrony Financial's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Synchrony Financial Implied Volatility

Synchrony Financial's implied volatility exposes the market's sentiment of Synchrony Financial stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Synchrony Financial's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Synchrony Financial stock will not fluctuate a lot when Synchrony Financial's options are near their expiration.

The Bottom Line

Although some other companies in the credit services industry are either recovering or due for a correction, Synchrony may not be as strong as the others in terms of longer-term growth potentials. To summarize, as of the 17th of July 2022, our primary 90 days 'Buy-vs-Sell' recommendation on the firm is Hold. We believe Synchrony Financial is currently undervalued with below average odds of financial distress for the next two years.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Raphi Shpitalnik do not own shares of Synchrony Financial. Please refer to our Terms of Use for any information regarding our disclosure principles.

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