What's in Store for Synchrony Financial's (SYF) Q3 Earnings?

Synchrony Financial (NYSE:SYF) SYF will release third-quarter 2021 results on Oct 19, before market open.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at $1.46 per share. The year-ago quarter’s earnings were delivered at 72 cents per share. The Zacks Consensus Estimate for the top line stands at $3.58 billion, indicating an upside of 3.6% from the year-earlier quarter’s reported number.

The company delivered second-quarter 2021 earnings per share of $2.12, which outpaced the Zacks Consensus Estimate of $1.47 by 44.2%. The bottom line also compares favorably with the year-ago quarter’s report of 6 cents per share, aided by lower expenses.

Key Factors to Impact Q3 Results

The company is likely to have gained from better net interest income. However, its other income might have suffered higher loyalty costs from better purchase volumes. The consensus mark for the same suggests a downside of 33.6% from the year-ago period’s reported figure.

Synchrony Financial is expected to have consistently gained from its digital sales volume.

The financial service provider is expected to have witnessed a decline in expenses in the to-be-reported quarter owing to reduced purchase volume and accounts, employee costs and operational losses, which in turn, might have aided its margins. This decrease is expected to have been supported by improved operational losses, and lower marketing and business development costs.

Synchrony Financial is expected to have benefited from a better purchase volume as the economy is bouncing back and people are spending more now.
The company has likely benefited from new account volume, which increased over the last few quarters.

Synchrony Financial is likely to have continued with capital deployment in the third quarter, which provided a further cushion to its performance.

The efficiency ratio has been suffering muted revenues for a while now due to reduced receivables, and lower interest and fee yield. The Zacks Consensus Estimate for the efficiency ratio is pegged at 39.1%, suggesting a dip from the prior-year period’s reported figure of 39.7%.

What the Quantitative Model Predicts

Our proven model predicts an earnings beat for Synchrony Financial this reporting cycle. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of a positive surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Synchrony Financial has an Earnings ESP of +6.80%. This is because the Most Accurate Estimate is pegged at $1.57, higher than the Zacks Consensus Estimate of $1.47. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Synchrony Financial currently carries a Zacks Rank #2.

Stocks to Consider

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:

Capital One Financial Corporation (NYSE:COF) COF has an Earnings ESP of +6.53% and a Zacks Rank #2, currently.

Moodys Corporation (NYSE:MCO) MCO has an Earnings ESP of +4.68% and a Zacks Rank of 3 at present.

Virtu Financial (NASDAQ:VIRT), Inc. VIRT has an Earnings ESP of +2.88% and is currently Zacks #3 Ranked.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.