Are Investors Undervaluing Synchrony (SYF) Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to...
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
Synchrony (SYF) is a stock many investors are watching right now. SYF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.55. This compares to its industry's average Forward P/E of 13.09. Over the past 52 weeks, SYF's Forward P/E has been as high as 11.09 and as low as 7.74, with a median of 8.74.
Investors should also note that SYF holds a PEG ratio of 0.42. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SYF's PEG compares to its industry's average PEG of 0.86. Over the past 52 weeks, SYF's PEG has been as high as 2.02 and as low as 0.35, with a median of 0.90.
Investors should also recognize that SYF has a P/B ratio of 2.08. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. SYF's current P/B looks attractive when compared to its industry's average P/B of 4.13. SYF's P/B has been as high as 2.33 and as low as 1.29, with a median of 1.96, over the past year.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. SYF has a P/S ratio of 1.87. This compares to its industry's average P/S of 2.48.
Finally, we should also recognize that SYF has a P/CF ratio of 7.71. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 26.46. Within the past 12 months, SYF's P/CF has been as high as 14.31 and as low as 7.04, with a median of 10.33.
Value investors will likely look at more than just these metrics, but the above data helps show that Synchrony is likely undervalued currently. And when considering the strength of its earnings outlook, SYF sticks out at as one of the market's strongest value stocks.
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