Synchrony Financial (SYF) Q4 Earnings: What's In Store?
Zacks Investment Research | Jan 16, 2018 08:22PM ET
Synchrony Financial (NYSE:SYF) will release fourth-quarter 2017 results on Jan 19, 2018 before the market opens.
Despite improving credit metrics, the company expects an increase in its allowance for loan losses from the prior-year period due to seasonal trends and catastrophic events. This is expected to impact the fourth-quarter results adversely. The Zacks Consensus Estimate for allowance for loan losses is currently pegged at $5.6 billion, up nearly 30% year over year.
Nevertheless, the company’s total interest and fees on loans are expected to increase in the fourth quarter, continuing the previous trend. This uptrend is driven primarily by the Retail Card platform and loan receivables growth. The Zacks Consensus Estimate for total interest and fees on loans is pegged at $4.3 billion, reflecting 9.8% year-over-year growth.
Synchrony Financial’s continuous generation of positive operating leverage improves the company’s efficiency ratio. For the quarter, the Zacks Consensus Estimate for efficiency ratio is pegged at 32%, reflecting a year-over-year improvement of 40 basis points.
Other Factors
The company’s strong deposit generation, loan receivables and increased online purchases are likely to drive revenues in the fourth quarter.
CareCredit receivables have been growing over past many years. The same trend is likely to continue in the fourth quarter as well, boosting the top line.
However, continued strong growth in lower yielding payment solution receivables is expected to push the margins down in the fourth quarter.
Also, an increase in spending on strategic investments is expected drain the bottom line in the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Synchrony Financial will beat on earnings this quarter. This is because a stock needs to have both a positive Zacks Investment Research
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