EPS of $1.94 increased by 31.5% from previous year
Gross margin of 53.0%
Net income of 789.00M
"N/A" - N/A
Synchrony Financial (0LC3.L) QQ3 2024 Results – Solid Profitability and Robust Liquidity in a Cautious Consumer Environment
Executive Summary
Synchrony Financial delivered a solid Q3 2024 performance characterized by healthy top-line growth, earnings resilience, and a fortress-like liquidity position. Revenue rose to approximately $5.904 billion, up about 10.3% year-over-year and 3.6% sequentially, while net income reached $789 million and diluted EPS was $1.94-$1.96. The quarter benefited from robust operating profitability (operating income of $1.942 billion and an operating margin near 32.9%), but was partially offset by a $914 million swing in total other income and expenses, which muted pretax and net results on a reported basis. Cash flow generation remained exceptional, with $2.763 billion of cash from operations and a free cash flow profile of $2.763 billion, underpinning a cash balance of about $17.98 billion at period end. Balance sheet strength is evident: total assets of roughly $119.23 billion, cash and cash equivalents of $17.93 billion, and a net debt position of about negative $2.30 billion (cash net of debt), supported by substantial liquidity from long-term investments and deposits. The company continued to deploy capital into shareholder returns, including $0.120 billion in dividends and $0.302 billion in share repurchases during the quarter. Valuation remains attractive relative to peers, with a trailing P/E around 6.4x and a price-to-book around 1.22x, underscoring a cash-generative model in a sector with mid-teens to low-teens net margins and modest ROE. The quarterly quarterly cadence included a mix of core credit card and private-label activities, with CareCredit and healthcare finance continuing to provide alternative growth engines within Synchrony’s diversified portfolio.
Total liabilities: ~$103.249B; Long-term debt: ~$15.632B; Pension/other liabilities not listed
Financial Highlights
Revenue: $5.904B; YoY +10.27%; QoQ +3.60%
Gross Profit: $3.131B; Gross margin ~53.0% (gross profit to revenue)
Operating Income: $1.942B; YoY +133.13%; QoQ +17.41%; Operating margin ~32.89%
Net Income: $0.789B; YoY +25.64%; QoQ +22.71%; Net margin ~13.36%
EPS (diluted): $1.94-$1.96; YoY +31.54%; QoQ +25.64%
EBITDA: $2.325B; EBITDA margin ~39.38%
Balance Sheet:
- Total assets: $119.23B
- Cash & cash equivalents: $17.93B; Cash & short-term investments: $20.28B; Net debt: -$2.30B
- Total current assets: $20.28B; Total non-current assets: $99.95B (approx.)
- Goodwill: ~$1.275B; Intangibles: ~$0.765B; Long-term investments: ~$102.193B
- Total liabilities: ~$103.249B; Long-term debt: ~$15.632B; Pension/other liabilities not listed
- Equity: ~$15.98B; payout ratio: ~15.6%; dividend yield: ~0.62%
Cash Flow:
- Net cash provided by operating activities: $2.763B
- Net cash used in investing activities: -$2.231B
- Net cash used in financing activities: -$1.231B
- Net change in cash: -$0.699B
- Cash at end of period: $17.98B; Free cash flow: $2.763B
Liquidity and leverage indicators point to a conservative balance sheet with ample liquidity and a modest level of net debt, supporting ongoing capital returns and resilience in a cyclical consumer lending environment.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
5.90B
10.27%
3.60%
Gross Profit
3.13B
-29.67%
10.60%
Operating Income
1.94B
133.13%
17.41%
Net Income
789.00M
25.64%
22.71%
EPS
1.96
31.54%
25.64%
Key Financial Ratios
grossProfitMargin
80.6%
operatingProfitMargin
24.8%
netProfitMargin
15.4%
returnOnAssets
0.64%
returnOnEquity
4.81%
debtEquityRatio
0.98
operatingCashFlowPerShare
$7.04
freeCashFlowPerShare
$7.04
dividendPayoutRatio
15.6%
priceToBookRatio
1.22
priceEarningsRatio
6.35
Net Income vs. Revenue
Expense Breakdown
Management Commentary
N/A (no earnings call transcript provided in the data).
N/A
— N/A
N/A
— N/A
Forward Guidance
Management did not publish explicit forward-looking targets in the supplied data. Given the quarter’s profitability and cash-flow strength, near-term priorities are likely to emphasize: (1) sustaining credit performance amid varied macro conditions via disciplined underwriting and portfolio management; (2) continued mix-shift toward higher-return segments such as private-label and cobranded cards, and healthcare financing through CareCredit; (3) maintaining a strong liquidity and capital position to support deposits, securitizations, and returns. Investors should monitor: credit losses and loan performance metrics, sensitivity to consumer spending and unemployment, cost discipline and efficiency initiatives, deposit growth vs. funding costs, and the sustainability of other income streams that contributed to the reported results. In a rising-rate environment, Synchrony’s mix of consumer finance and retail partnership programs may offer favorable net interest income dynamics over time, but this is offset by the volatility in non-operating items that affected reported pretax and net results in Q3.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LC3.L Focus
53.03%
24.80%
4.81%
6.35%
0JR2.L
35.10%
27.40%
2.04%
19.62%
0IRE.L
60.00%
19.40%
2.10%
31.07%
0JQR.L
1.00%
-26.50%
-2.43%
-9.68%
0J5Q.L
61.10%
24.10%
3.93%
22.56%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Synchrony’s QQ3 2024 results underscore a cash-generative, liquidity-rich franchise with resilient profitability and a disciplined capital allocation posture. The company trades at a relatively modest multiple (P/E ~6.4x; P/B ~1.22x) versus some peers, reflecting both the sector’s cyclicality and the current earnings composition. The balance sheet supports a continued program of shareholder returns, evidenced by dividends and ongoing buybacks (dividends ~$120M and repurchases ~$302M in the quarter). The key to investment visibility is the trajectory of credit losses and operating margins as macro conditions evolve, along with the ability to sustain revenue growth from retailer networks and healthcare financing. If Synchrony can maintain credit quality while expanding higher-margin segments, the earnings power is likely to compound modestly with favorable FCF contribution. Investors should monitor credit performance signals, funding costs, and the durability of non-operating income streams that affected quarterly results. Overall, the stock offers attractive downside protection given liquidity, a strong cash generation profile, and a conservative balance sheet, with the potential for multiple expansion if earnings visibility improves and credit risk remains well contained.
Key Investment Factors
Growth Potential
Strong growth potential from retailer/co-brand partnerships and the CareCredit healthcare financing line. Expansion of private-label and cobranded cards across existing and new retail networks can drive incremental loan balances and fee-based revenue. The scale of cash generation supports investments in digital channels, customer experience, and potential expansion into adjacent consumer financing segments.
Profitability Risk
Key risks include consumer credit quality in a softer macro backdrop, elevated losses during economic downturns, and competition from fintechs and digital lenders. The sizable reliance on other income items and sensitivity to non-operating charges could introduce earnings volatility. Regulatory and macro policy shifts could impact funding costs, lending volumes, or consumer protection requirements.
Financial Position
Balance sheet is highly liquid with $17.93B in cash and total current assets of ~$20.28B, plus substantial long-term investments (~$102.19B). Negative net debt indicates a cash-rich profile, supporting a durable capital return program. Leverage remains moderate (long-term debt around $15.63B; total debt $15.63B) with an implied equity base of ~$15.98B, yielding a conservative risk posture and ample room for credit cycle cycles.
SWOT Analysis
Strengths
Robust liquidity and cash-rich balance sheet: cash and equivalents ~$17.93B; net debt negative ~$2.30B
Strong free cash flow generation: $2.763B from operations; supports dividends and buybacks
Diversified consumer finance platform with broad retailer network and healthcare financing via CareCredit
Healthy scale in a fragmented U.S. consumer finance market; sizeable current assets relative to liabilities
Weaknesses
Reported results show material volatility from total other income/expenses, which can obscure operating performance
ROE (~4.8%) remains modest for a financial services franchise with substantial scale
Complex mix of funding and income streams may introduce earnings volatility in certain quarters
Opportunities
Expansion of cobranded/private-label card programs with retailers to drive loan growth and fee income
Growth of CareCredit and healthcare-related financing across more partners
Potential operating leverage and efficiency improvements to lift margins in a rising-rate environment
Threats
Macro consumer insecurity and potential deterioration in credit quality during an economic slowdown
Competitive pressure from fintech lenders and digital payment solutions
Regulatory changes affecting consumer lending, data usage, or fee structures could impact profitability