Banking, finance, and taxes

How Synchrony Knocked It Out of the Park With Earnings

Chris Lange

Published: January 23, 2019 11:25 am

Last Updated: January 31, 2020 1:42 am

When Synchrony Financial (NYSE: SYF) released its fourth-quarter earnings report before the markets opened on Wednesday, the company said that it had $1.09 in earnings per share (EPS) and $4.94 billion in revenue. Thomson Reuters consensus estimates had called for EPS of $0.93 on $4.25 billion in revenue.

During the latest quarter, loan receivables grew $11 billion, or 14%, year over year to $93 billion. Deposits grew $8 billion, or 13%, to $64 billion.

Provision for loan losses increased $98 million, or 7%, to $1.5 billion, driven by the PayPal Credit program reserve build partially offset by moderating credit trends.

Synchrony’s sales platforms were reported as follows:

• Retail Card period-end loan receivables grew 16%, driven primarily by the PayPal Credit program acquisition.
• Payment Solutions period-end loan receivables grew 9%, led by home furnishings and luxury.
• CareCredit period-end loan receivables grew 7%, led by dental and veterinary.

Synchrony also renewed and extended key retail card relationships with Sam’s Club and Amazon. At the same time, Walmart agreed to dismiss its lawsuit against the firm.

Margaret Keane, president and CEO of Synchrony, commented:

Synchrony ended the year with significant momentum heading into 2019—we generated strong results this quarter, renewed and extended a number of key relationships, added new programs, and expanded our network. Our business continues to deliver organic growth through innovative marketing, promotions and value propositions, in addition to leveraging the investments we have been making in data analytics, artificial intelligence, and digital capabilities. And we did this while maintaining a strong balance sheet and returning capital to shareholders through growth, portfolio acquisitions, and the execution of our capital plan. We continue to be well positioned for the future and look forward to the opportunities ahead in 2019.

Shares of Synchrony were last seen up about 10% at $29.24 on Wednesday, in a 52-week range of $21.77 to $40.59 and with a consensus analyst price target of $34.47.