Should Value Investors Buy Synchrony (SYF) Stock?
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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
One stock to keep an eye on is Synchrony (SYF). SYF is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 8.04 right now. For comparison, its industry sports an average P/E of 13.29. SYF's Forward P/E has been as high as 11.09 and as low as 7.74, with a median of 8.70, all within the past year.
Investors should also note that SYF holds a PEG ratio of 0.35. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SYF's PEG compares to its industry's average PEG of 0.83. 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 0.46.
Another notable valuation metric for SYF is its P/B ratio of 1.93. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.24. Over the past year, SYF's P/B has been as high as 2.33 and as low as 1.29, with a median of 1.98.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SYF has a P/S ratio of 1.7. This compares to its industry's average P/S of 2.37.
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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