Is it time to buy or sell Synchrony Financial after missing Q3 revenue estimates?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Oct 19, 2021
  • Synchrony Financial shares on Tuesday edged higher 1.33% after announcing its FQ3 results.
  • The company reported its most recent quarterly earnings before markets opened, beating expectations.
  • However, revenue for the quarter declined significantly, missing the consensus Street estimate.

On Tuesday, Synchrony Financial (NYSE:SYF) shares edged higher by 1.33% after announcing its most recent quarterly results. The company reported its fiscal third-quarter earnings before markets opened beating expectations. However, revenue for the period declined substantially pushing it below Street estimates.

The company posted FQ3 GAAP earnings per share of $2.00, beating the average for analyst expectations of $1.51. On the other hand, total revenue for the quarter plummeted by more than 33% to $2.486 billion, missing the consensus Street estimate of $2.516 billion.

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The stock is up more than 50% this year and nearly 78% over the last 12 months,

Synchrony still looks undervalued

From an investment perspective, Synchrony Financial shares trade at a compelling P/E ratio of just 9.23, despite this year’s gains. Therefore, the stock is still an attractive option for value investors.

Moreover, although analysts expect earnings to slow down this year and next year, they also forecast an annual growth rate of about 38.20%. Therefore growth investors willing to overlook short-term turbulence could find SYF as an exciting option.

The company current dividend yield of nearly 2% could also gain the attention of dividend investors.

Source – TradingView

Technically, Synchrony Financial shares seem to be trading within a gently ascending channel formation in the intraday chart. The stock recently bounced off the 100-day trendline support, pushing it towards the trendline resistance.

However, the stock is still far from reaching the overbought conditions of the 14-day RSI, leaving room for more upward movement.

Therefore, investors could target extended gains at about $54.87, or higher at $57.80. On the other hand, if the trendline resistance triggers a pullback, the stock could find support at $48.69, or lower at $45.64.

There is still time to buy SYF shares

In summary, although Synchrony Financial shares are up more than 51% this year, the stock still trades at exciting valuation multiples, making it a potential pick for different types of investors.

Therefore, with shares far from reaching overbought conditions, it may not be too late to invest in SYF stock.

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