Synchrony Financial Slides By in Q2

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When Synchrony Financial (NYSE: SYF) released its second-quarter financial results before the markets opened on Friday, the company said that it had $0.92 in earnings per share (EPS) and $3.73 billion in revenue. The consensus estimates from Thomson Reuters had called for EPS of $0.82 and $3.83 billion in revenue. The same period of last year reportedly had $0.61 in EPS on revenue of $3.64 billion.

During the latest quarter, loan receivables growth was 5%, primarily driven by purchase volume growth of 2% and average active account growth of 1%.

At the same time, deposits grew to $59 billion, up $6 billion, or 12%, and comprised 73% of funding compared to 72% last year.

The company did not issue any guidance for the coming quarter. However, the consensus estimates call for $0.85 in EPS and $4.33 billion in revenue.

Margaret Keane, president and CEO, commented:

We have continued to deliver solid results, driving organic growth while launching new programs and renewing key relationships. We are pleased to have closed the PayPal transaction, which is now a top 5 program. Our relationship with PayPal is exactly what we look for in a program – strong engagement, significant growth opportunities, and good economic alignment with the partner. Extending this relationship will enable us to leverage new opportunities to meaningfully expand this program and drive growth. And while the Walmart program will not be renewed as we were unable to reach terms that made economic sense for our company and our shareholders, we have strategic options that we expect will fully replace the EPS impact. We remain focused on the risk-adjusted returns of our programs and returning capital to shareholders, as evidenced by our actions this quarter, which included significantly increasing the quarterly common stock dividend and share repurchase program.

Shares of Synchrony were last seen up down 1.6% at $29.51 Friday morning, with a consensus price target of $43.70 and a 52-week trading range of $28.33 to $40.59.