Synchrony Financial

Methodology

Synchrony's consumer credit card business generates earnings volatility from credit cycles, charge-off rates, and partnership renewals. Normalize for credit cycle positioning and focus on sustainable loss rates and net interest margins. Consumer finance companies require careful assessment of credit quality and reserve adequacy rather than extrapolating current conditions.

Methodology

PEG analysis is challenging for Synchrony given earnings swings from credit provisioning and partnership economics. During benign credit periods, low PEG ratios can be misleading before charge-offs normalize. Focus on price-to-book value and returns through credit cycles rather than earnings growth for this consumer finance lender.

Methodology

Synchrony offers an attractive dividend with management targeting consistent capital returns when credit performance supports it. The dividend adds value though sustainability depends on charge-off trends. For consumer finance companies, credit quality and capital adequacy matter more than traditional income metrics through cycles.