What's In Store For Synchrony Financial's (SYF) Q2 Earnings?
Zacks Investment Research | Jul 16, 2019 11:04PM ET
Synchrony Financial (NYSE:SYF) will release second-quarter 2019 results on Jul 19, before the market opens. In the last reported quarter, the company delivered a positive surprise of 13.6%, backed by the PayPal Credit program acquisition and higher net interest income.
Let’s see, how things are shaping up prior to the announcement.
Earnings Catalysts for Q2
The Zacks Consensus Estimate for earnings is pegged at 98 cents, up 6.5% from the year-ago reported quarter. The company’s performance is likely to be boosted by an expanded purchase volume, its constant efforts in portfolio enhancement through alliances, etc.
Its Retail Card platform is expected to retain the winning streak with a solid card sale, which in turn, might have contributed to its top line. The Zacks Consensus Estimate for revenues stands at $4.1 billion, indicating an increase of 12.1% from the prior-year reported number.
The company makes constant efforts in the form of strategic partnerships to provide customers with better purchasing options. This inorganic growth initiative is likely to have further favored its online purchases platform.
Per the company’s earlier projection, there will be a slight drop in its margin in the second quarter of 2019.
Reserve build is anticipated around $100-$150 million during the period to be reported. According to Synchrony Financial’s past forecast, its net charge-offs are expected to be 20-30 basis points higher in the to-be-reported quarter when compared with the first quarter, mainly due to recovery timings and full reflection of the PayPal Credit program.
Continued capital deployment in the second quarter of 2019 is likely to have provided an additional impetus to the company’s bottom line.
However, the company might have endured elevated expenses due to investments in sales platforms, alliances, etc. Higher marketing expenses too possibly have weighed down its margins to some extent.
What the Quantitative Model Predicts
Our proven model does not conclusively show that Synchrony Financial is likely to beat on earnings this reporting cycle. This is because the stock has the right combination of a positive Zacks Investment Research
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