Synchrony Jumps 9% in a Month: Time to Hold or Book Profits?

Synchrony Financial SYF shares have gained 8.7% in the past month due to positive investor sentiment about its profitability and shareholder value boosting efforts. The stockalso outperformed the industry and the S&P 500 Index. During this time, peers like American Express Company AXP and Capital One Financial Corporation COF witnessed growth, but to a lesser extent.

1-Month Price Performance: SYF, AXP, COF, Industry & S&P 500

Synchrony — with a market cap of $21.6 billion — is a premier consumer financial services company that offers a wide range of credit products. Given itsimproving digital capabilitiesand expanding CareCredit platformand financial service offerings, SYF has more room for growth.

Let’s delve deeper.

SYF’s Major Growth Drivers

Synchrony has strategically forged alliances to strengthen its business, with a focus on enhancing digital capabilities and expanding its reach. Notable partnerships with industry leaders such as PayPal, Venmo, J.Crew Group, and Mastercard have significantly improved the customer payment experience. Additionally, an updated agreement with Fiserv further reinforces Synchrony’s ecosystem and competitive position. The company also teamed up with Adobe Commerce to support e-commerce growth through flexible payment solutions.

The CareCredit platform continues to show strong growth potential, particularly as Synchrony expands into broader health systems. While the company divested Pets Best, it remains committed to the pet care market through key partnerships with IPH, Thrive Pet Healthcare, and others. Collaborations with HABRI, Veterinary Growth Partners, and leading academic institutions further position Synchrony for long-term growth in pet care financing. Account growth within the Health & Wellness platform is also gaining momentum.

Synchrony ended the first quarter with a solid balance sheet. Total liquidity stood at $26.4 billion, representing 21.7% of total assets. Its debt-to-capital ratio of 50.6% compares favorably to the industry average of 54.7%. Cash and cash equivalents rose 47% from the end of 2024, reaching $21.6 billion as of March 31, 2025. This financial strength provides ample flexibility to enhance shareholder returns.

In the first quarter, Synchrony returned $600 million to shareholders through share buybacks and distributed $97 million in common dividends. The board also approved a new $2.5 billion share repurchase program, set to run through June 30, 2026. Additionally, the company raised its quarterly dividend by 20%, increasing it to 30 cents per share.

SYF’s Earnings Estimates & Surprise History

The Zacks Consensus Estimate for 2025 adjusted earnings for Synchrony Financialis currently pegged at $7.69 per share, indicating 16.7% year-over-year growth. Over the past month, it has witnessed three upward estimate revisions against one movement in the opposite direction. The consensus mark for 2026 earnings signals further 13.7% growth. The consensus estimate for 2025 and 2026 revenues suggests 3% and 5% year-over-year increases, respectively.(See the Zacks Earnings Calendar to stay ahead of market-making news.)

SYF beat earnings estimates in each of the past four quarters, with an average surprise of 10.2%.

Synchrony Financial Price and EPS Surprise

Synchrony Financial price-eps-surprise | Synchrony Financial Quote

Synchrony Financial Stock is Inexpensive

SYF is trading comparatively cheap at the moment from a valuation standpoint. Its forward earnings multiple of 6.99X is lower than its five-year median of 7.50X and the industry average of 18.08X. The stock also looks attractively valued relative to peers like American Express and Capital One Financial, with a forward 12-month P/E of 17.78X and 11.38X, respectively. SYF now has a Value Score of A.

SYF’s Risks

However, there are some factors that investors should keep an eye on.

Its non-interest expenses are on the rise, impacting profit growth. The metric rose 9.4% in 2022, 9.7% in 2023, 1.7% in 2024 and 3.1% in the first quarter of 2025. Also, due to economic pressures, repayments can take a hit, affecting the company's cash-generating abilities. Net charge-offs ratio came in at 6.31% for 2024, higher than the estimated range of 5.75-6%. In the first quarter, it increased to 6.38%.

Conclusion

Synchrony’s 8.7% stock gain over the past month reflects growing investor confidence in its strong fundamentals, including robust earnings growth, expanding digital partnerships, and consistent capital returns. The company’s attractive valuation, solid balance sheet, and growing CareCredit and Health & Wellness platforms further support its long-term growth outlook.

However, investors should remain cautious about rising non-interest expenses and elevated net charge-off ratios, which could pressure profitability in the near term. With a Zacks Rank #3 (Hold), Synchrony appears reasonably positioned, making it a stock worth holding while keeping an eye on evolving credit trends and cost control efforts.You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research