What's In Store For Synchrony Financial (SYF) Q4 Earnings?
Zacks Investment Research | Jan 20, 2020 09:18PM ET
Synchrony Financial (NYSE:SYF) will release fourth-quarter 2019 results on Jan 24, before the market opens.
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $1.08 cents, suggesting a 0.9% dip from the year-ago reported figure, mainly due to lower revenues.
In the last reported quarter, the company delivered a positive surprise of 8.9%, backed by higher net interest income excluding the impact of the Walmart (NYSE:WMT) portfolio. The bottom line also surged 34% year over year.
Key Catalysts for Q4 Earnings
The company’s revenues might have been affected by lower net interest income in the quarter under review. The Zacks Consensus Estimate for the metric is pegged at $3.9 billion, indicating a 9.2% downfall from the year-ago reported figure.
Net interest margin is generally lower in the fourth quarter, evident from the past couple of years’ trend that most likely continued in the to-be-reported quarter as well. Per the last earnings call, the metric is expected to contract 50 bps, coming in at 15.5%.
Synchrony Financial is expected to have endured elevated expenses due to investments in sales platforms. Also, higher marketing expenses might have weighed down its margins to some extent.
However, the company’s digital sales are likely to have witnessed consistent growth in the quarter under discussion.
On account of reduction related to the Walmart Portfolio, the impending quarterly results might reflect lower loan loss reserve by $35-$40 million. The consensus mark for allowance for loan losses implies an 11.4% decline from the year-earlier reported number.
The fourth quarter is likely to have witnessed core reserve bill in the range of $100-$150 million, driven by growth.
Synchrony Financial is expected to have continued with capital deployment for addition of shareholder value. Steady capital allocation in the period is likely to have provided an additional impetus to the company’s bottom line.
What the Quantitative Model Predicts
Our proven model doesn’t conclusively predict an earnings beat for Synchrony Financial this reporting cycle. This is because the stock needs the right combination of a positive Zacks Investment Research
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