Will Lower Active Accounts Impact Synchrony's Q4 Earnings Potential?

Consumer financial services company, Synchrony Financial SYF, is set to report fourth-quarter 2025 results on Jan. 27, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $2.02 per shareon revenues of $4.79 billion.

The fourth-quarter earnings estimate has remained stable over the past week. The bottom-line projection indicates a year-over-year increase of 5.8%. The Zacks Consensus Estimate for quarterly revenues implies year-over-year growth of 4.3%.

For the full-year 2025, the Zacks Consensus Estimate for Synchrony’s revenues is pegged at $17.92 billion, implying a decline of 0.5% year over year. However, the consensus mark for the current year EPS is pegged at $9.25, signaling a jump of around 40.4% on a year-over-year basis.

SYF’s earnings beat the consensus estimate in each of the last four quarters, with the average surprise being 22.67%.

Synchrony Financial Price and EPS Surprise

Synchrony Financial price-eps-surprise | Synchrony Financial Quote

Q4 Earnings Whispers for SYF

Our proven model does not conclusively predict an earnings beat for the company this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the odds of an earnings beat, but that is not the case here.

Synchrony has an Earnings ESP of -0.60% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

What’s Shaping SYF’s Q4 Results?

Synchrony is expected to have seen advantages in the fourth quarter from increased net interest margin and higher purchase volumes. The net charge-offs are also likely to have substantially decreased in the quarter under review. Our model predicts interest and fees on loans of $5.6 billion for the quarter, marginally up from $5.5 billion a year ago. Higher figures from Health & Wellness and Digital are likely to have anchored the results.

The Zacks Consensus Estimate for net interest margin is pegged at 15.72%, up from 15.01% achieved a year ago, increasing its profitability. The consensus mark for total purchase volumes indicates 2.3% year-over-year growth.

The consensus mark for the net charge-offs ratio is pegged at 5.41, down from 6.45 a year ago. The above-mentioned factors are likely to have benefited the company in the fourth quarter, positioning it for year-over-year growth. However, Synchrony is expected to have incurred increased information processing and employee costs in the fourth quarter and witnessed lower average active accounts, partially offsetting the positives. 

Both the Zacks Consensus Estimate and our model estimate indicate that the total average active accounts are likely to decline almost 2% in the fourth quarter. It is expected to have witnessed a 1.2% decrease in average interest-earning assets. These make an earnings beat uncertain for the to-be-reported quarter.

Stocks That Warrant a Look

While an earnings beat looks uncertain for Synchrony, here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:

Barclays PLC BCS has an Earnings ESP of +3.61% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Barclays’ bottom line for the to-be-reported quarter is pegged at 42 cents per share, which remained stable over the past week and indicates 23.5% year-over-year growth. The consensus estimate for Barclays’ revenues is pegged at $9.11 billion, a 2.1% increase from a year ago.

Cboe Global Markets, Inc. CBOE has an Earnings ESP of +10.75% and a Zacks Rank of 2.

The Zacks Consensus Estimate for Cboe Global’s bottom line for the to-be-reported quarter is pegged at $2.66 per share, a 26.7% jump from a year ago. The consensus estimate for Cboe Global’s revenues is pegged at $614.82 million, a 17.2% year-over-year jump.

Ameriprise Financial, Inc. AMP has an Earnings ESP of +3.08% and a Zacks Rank of 3.

The Zacks Consensus Estimate for Ameriprise Financial’s bottom line for the to-be-reported quarter is pegged at $10.33 per share, which indicates 10.4% year-over-year growth. The consensus estimate for Ameriprise Financial’s revenues is pegged at $4.73 billion, a 6% increase from a year ago.

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This article originally published on Zacks Investment Research (zacks.com).

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