Consumer financial services company, Synchrony Financial SYF, is set to report fourth-quarter 2024 results on Jan. 28, 2025, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings is currently pegged at $1.90 per share on revenues of $4.57 billion.

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The fourth-quarter earnings estimate has moved north by 2 cents over the past month. The bottom-line projection indicates a year-over-year increase of 84.5%. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 2.2%.

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For the full year, the Zacks Consensus Estimate for Synchrony’s revenues is pegged at $17.98 billion, implying a rise of 5.4% year over year. Also, the consensus mark for current year EPS is pegged at $6.54, implying a jump of around 26% on a year-over-year basis.

SYF beat the consensus estimate for earnings in three of the last four quarters and missed once, with the average surprise being 4.5%.

Q4 Earnings Whispers for SYF

Our proven model predicts a likely 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. That’s precisely the case here.

Synchronyhas an Earnings ESP of +0.96% 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 loan receivables, improving efficiency ratio and average active accounts. The Zacks Consensus Estimate for net interest income indicates 3.4% year-over-year growth, while our estimate predicts a 3.1% increase. Our model predicts an increase in interest and fees on loans to over $5.5billion from $5.3 billion a year ago.

SYF is expected to have continued gaining from digital sales volume in the to-be-reported quarter. Both the Zacks Consensus Estimate and our model estimate suggest that the total average active accounts are likely to have risen more than 2% year over year in the fourth quarter.

The financial service provider is expected to have witnessed an increase in Average Interest-Earning Assets. The consensus estimate indicates a 6.5% increase in the metric from the year-ago period. The Zacks Consensus Estimate for the efficiency ratio is pegged at 34.80%, indicating an improvement from the prior-year reported figure of 36%.

The above-mentioned factors are likely to have benefited the company in the fourth quarter, positioning it for not only year-over-year growth but also an earnings beat. However, Synchrony is expected to have incurred increased information processing, employee costs and professional fees in the fourth quarter and witnessed lower purchase volumes, partially offsetting the positives. 

The Zacks Consensus Estimate for Synchrony’s total purchase volumes for the quarter under review indicates a decline of nearly 3% year over year, while our model predicts an almost 2% fall. The volatile economic environment may have discouraged certain transactions, especially big-ticket items, potentially constraining SYF's ability to realize its full portfolio growth potential.

The Zacks Consensus Estimate for net interest margin is pegged at 14.73%, while our estimate suggests a net interest margin of 14.02%, down from 15.10% achieved a year ago, lowering its profitability. The net charge-offs are also likely to have substantially risen in the quarter under review.

Other Stocks That Warrant a Look

Here are some other companies worth considering from the broader finance space, as our model shows that these, too, have the right combination of elements to beat on earnings this time around:

Rithm Capital Corp. RITM has an Earnings ESP of +2.22% and is a Zacks #1 Ranked player. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Rithm Capital’s bottom line for the to-be-reported quarter is pegged at 45 cents per share, which remained stable over the past month. The consensus estimate for RITM’s revenues is pegged at $1.23 billion, a 73.2% growth from a year ago.

Bread Financial Holdings, Inc. BFH has an Earnings ESP of +25.94% and a Zacks Rank of 2.

The Zacks Consensus Estimate for Bread Financial’s bottom line for the to-be-reported quarter is pegged at 34 cents per share, which increased by 4 cents in the past month. BFH beat earnings estimates in two of the past four quarters and missed twice, with an average surprise of 70.2%.

OneMain Holdings, Inc. OMF has an Earnings ESP of +1.93% and a Zacks Rank of 3.

The Zacks Consensus Estimate for OneMain’s bottom line for the to-be-reported quarter is pegged at $1.12 per share, which remained stable over the past week. OMF beat earnings estimates in all the past four quarters, with an average surprise of 7%.

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Synchrony Financial (SYF) : Free Stock Analysis Report

OneMain Holdings, Inc. (OMF) : Free Stock Analysis Report

Bread Financial Holdings, Inc. (BFH) : Free Stock Analysis Report

Rithm Capital Corp. (RITM) : Free Stock Analysis Report

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