Synchrony vs. Ally: Which Consumer Financial Services Stock is a Better Buy? By StockNews

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Synchrony vs. Ally: Which Consumer Financial Services Stock is a Better Buy?

Published Dec 06, 2021 05:26PM ET Updated Dec 06, 2021 06:30PM ET

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ALLY

+4.06%

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SYF

+4.72%

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The consumer financial sector has been making an impressive comeback on rising financial transactions and increased discretionary spending. Synchrony (SYF) and Ally (ALLY) should benefit from the industry tailwinds. But which of these two stocks is a better buy now? Read more to find out.Synchrony Financial (NYSE:SYF) operates as a consumer financial services company providing specialized financing programs and consumer banking products to auto, retail, home, and other industries. On the other hand, Ally Financial Inc. (NYSE:ALLY) is a bank holding company providing various digital financial products and services to consumer, commercial, and corporate customers, primarily in the United States and Canada.

While the interest-rate environment remains low, the consumer financial services sector is witnessing a solid recovery thanks to increasing financial transactions and capital market activities. Despite high inflation, spending on services and discretionary items has increased significantly, increasing the use of online payment methods amid the hybrid lifestyle. Moreover, the growing technological innovation and rapid adoption of digital services should enhance the consumer financial services market in the upcoming months. According to a Research and Markets report, the global consumer finance market is expected to grow at a CAGR of 5% by 2026. Therefore, both SYF and ALLY should benefit.

ALLY has gained 48.6% over the past year, while SYF has returned 40%. However, SYF’s 30.5% gains year-to-date are higher than ALLY’s 29.9% returns. Moreover, SYF is the clear winner with 12.9% gains versus ALLY’s 7.2% returns in terms of the past nine months’ performance.

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