Synchrony Financial’s (NYSE:SYF) fourth-quarter 2019 earnings per share of $1.10 beat the Zacks Consensus Estimate by 1.9%. The bottom line also improved 0.9% year over year on the back of higher other income. The company’s Payments Solution and CareCredit segments also contributed to its results. This excludes the impact of the Walmart (NYSE:WMT) portfolio.
Results in Detail
The company’s net interest income decreased 7% to $4 billion in the fourth quarter due to the impact of the Walmart consumer portfolio sale.
Moreover, the company’s other income soared 63% to $104 million, mainly attributable to lower loyalty program expenses.
In the quarter under review, loan receivables declined 6% year over year.
Deposits were $65.1 billion, up 2% from the year-ago quarter.
Provision for loan loss plunged 24% year over year to $1.1 billion on the back of lower core business development and information processing along with other expenses.
Total other expenses are flat at $1.1 billion with the year-ago reported results.
Sales Platforms Update
Retail Card
The company’s interest and fees on loans fell 10% year over year due to the sale of the Walmart consumer portfolio.
Loan receivables were down 12% while the average active accounts declined 7%.
Payment Solutions
Interest and fees on loans rose 4% year over year on the back of loan receivables growth. Loan receivables augmented 4% including the impact of the reclassification of the Yamaha portfolio to loan receivables held for sale.
Purchase volume expanded 6% while average active account rose 3%.
CareCredit
Interest and fees on loans increased 9% year over year, attributable to higher loans receivables.
While purchase volume registered 12% growth, the average active account reported a 5% rise.
Financial Position
Total assets as of Dec 31, 2019 were $104.8 billion, down 1.8% from the level as of Dec 31, 2018.
Total borrowings as of fourth-quarter 2019 end were $19.9 billion, down 17.2% from 2018-end level.
The company’s balance sheet was consistently strong during the reported quarter with total liquidity of $23.4 billion reflecting 22.3% of the total assets.
While return on assets was 2.7%, the return on equity was 19%.
Efficiency ratio was 34.8% in the fourth quarter of 2019.
Capital Deployment
During the quarter under consideration, the company purchased shares worth $1.4 billion and paid out a dividend of 22 cents per share.
Rank
Synchrony Financial carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Upcoming Releases From Finance Sector
Some stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:
AXA Equitable Holdings, Inc. (NYSE:EQH) is slated to announce fourth-quarter earnings on Feb 27. The stock has an Earnings ESP of +2.68% and a Zacks Rank #2 (Buy).
Moody's Corporation (NYSE:MCO) has an Earnings ESP of +1.00% and a Zacks Rank of 2. The company is scheduled to release fourth-quarter earnings on Feb 12.
ProAssurance Corporation (NYSE:PRA) is set to report fourth-quarter earnings on Feb 20. The stock is Zacks #2 Ranked and has an Earnings ESP of +36.71%.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>
Moody's Corporation (MCO): Free Stock Analysis Report
Synchrony Financial (SYF): Free Stock Analysis Report
ProAssurance Corporation (PRA): Free Stock Analysis Report
AXA Equitable Holdings, Inc. (EQH): Free Stock Analysis Report
Original post