Synchrony Financial (SYF) is back in focus after releasing detailed monthly charge-off and delinquency statistics and relaunching an enhanced credit card program with Dick's Sporting Goods that features everyday 10% back in rewards on qualifying purchases.
See our latest analysis for Synchrony Financial.
The recent credit card relaunch with Dick's Sporting Goods and the detailed monthly credit quality updates come at a time when Synchrony Financial's share price is down 16.07% year to date, even as its 1-year total shareholder return is 20.29% and the 3-year total shareholder return is very large at about 2.5x, suggesting longer term holders have still seen strong compounding.
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With the stock down 16% year to date, but showing a 1-year total return of 20% and a 3-year gain of about 2.5x, plus a value score of 6 and an indicated intrinsic discount of 54%, is Synchrony trading at a genuine discount, or has the market already priced in future growth?
Most Popular Narrative: 32.3% Undervalued
Compared to the last close at $71.05, the most followed narrative pegs Synchrony Financial’s fair value much higher at $105, which sets a clear valuation gap for investors to think about.
In plain valuation terms:
Your DCF/Excess Return analysis suggests Synchrony Financial’s intrinsic value is around $145 per share, meaning the stock could be trading at a steep discount (~40% undervalued) versus its fundamental long-term economic profit potential. Current market pricing and consensus analyst targets are significantly lower, around the mid-$80s to ~$100, mainly because of short-term earnings expectations and risk pricing.
Curious what sits between a $71 share price and a three digit valuation? According to barmoss, it starts with robust excess returns and a disciplined discount rate. It then layers in confident assumptions on profitability and book value compounding that most models do not use so aggressively.
Result: Fair Value of $105 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, investors still need to watch for a sharp turn in consumer credit conditions or tighter regulation on fees, which could quickly challenge this undervaluation story.
Find out about the key risks to this Synchrony Financial narrative.
Next Steps
With such a mixed story of discounts and risks, the next move is yours. Look through the detail and weigh up the 5 key rewards and 3 important warning signs
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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