Are Investors Undervaluing Synchrony (SYF) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Synchrony (SYF). SYF is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 8.64, which compares to its industry's average of 15.13. Over the past year, SYF's Forward P/E has been as high as 12.30 and as low as 3.16, with a median of 9.88.
SYF is also sporting a PEG ratio of 0.96. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SYF's PEG compares to its industry's average PEG of 2.10. Within the past year, SYF's PEG has been as high as 2.97 and as low as 0.44, with a median of 1.82.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SYF has a P/S ratio of 1.45. This compares to its industry's average P/S of 2.42.
These are only a few of the key metrics included in Synchrony's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SYF looks like an impressive value stock at the moment.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.