What's in Store for Synchrony Financial's (SYF) Q2 Earnings?

Synchrony Financial SYF will release second-quarter 2020 results on Jul 21, before the market opens.

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is pegged at 3 cents per share, suggesting a 96.9% drop from the year-ago reported figure, mainly due to muted revenues.

In the last reported quarter, the company reported earnings per share of 58 cents, missing the Zacks Consensus Estimate by 25.6%. The bottom line also declined 42% year over year due to muted revenues.

Key Catalysts for Q2 Earnings

The company’s revenues might have been affected by COVID-19 pandemic in the quarter under review. The Zacks Consensus Estimate for the top line is pegged at $3.3 billion, indicating a 19.6% downfall from the year-earlier reported number. The consensus mark for net interest income stands at $3.3 billion, hinting at a 19.6% fall from the prior-year reported number.

Synchrony Financial is also expected to have endured elevated expenses due to operational losses and certain expenditures related to its response to COVID-19.

Further, purchase volume is likely to get dented due to restrictions on travel, entertainment and events, partly offset by increased spending on grocery, drugstore, etc.

The Zacks Consensus Estimate for efficiency ratio is 41.44%, implying a rise from the year-ago reported figure of 31.3%.

Nonetheless, the company’s digital sales are likely to have witnessed consistent growth in the quarter under discussion. In Retail Card, the company is likely to have witnessed a hike in digital sales and mobile channel.

However, the CareCredit line might have suffered due to decline in elective procedures, store closures, etc.

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, which you can see below. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: Synchrony Financial has an Earnings ESP of +1025%. This is because the Most Accurate Estimate is pegged at 36 cents, higher than the Zacks Consensus Estimate of 3 cents per share. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Synchrony Financial Price and EPS Surprise

Synchrony Financial Price and EPS Surprise

Synchrony Financial price-eps-surprise | Synchrony Financial Quote

Zacks Rank: Synchrony Financial currently carries a Zacks Rank #3 (Hold), which increases the predictive power of ESP.

Other Stocks to Consider

Some other stocks worth considering from the finance sector with a perfect mix of elements to surpass estimates in the upcoming quarterly releases are as follows:

Nasdaq, Inc. NDAQ is set to report second-quarter earnings on Jul 22. The stock currently has a Zacks Rank of 3 and an Earnings ESP of +0.42%.

AXOS FINANCIAL, INC AX has an Earnings ESP of +2.92% and is presently Zacks #3 Ranked. The company is scheduled to release second-quarter earnings on Jul 29.

Moodys Corporation MCO is slated to announce second-quarter earnings on Jul 29. The stock has an Earnings ESP of +7.17% and is a #3 Ranked player.

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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.

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