EPS of $1.91 increased by 85.6% from previous year
Gross margin of 45.5%
Net income of 774.00M
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Synchrony Financial (0LC3.L) QQ4 2024 Results — Revenue Rebound YoY with Solid Profitability and Strong Liquidity in a Slower QoQ Quarter
Executive Summary
Synchrony Financial posted a robust year-over-year (YoY) revenue surge in QQ4 2024, with revenue of $4.919 billion, up 34.4% from the prior-year quarter, driven by the company’s diversified consumer finance portfolio and higher interest income. However, the quarter showed a material sequential (QoQ) decline of 16.7% from Q3 2024, underscoring seasonality and the cyclicality common in cobranded card programs. Net income of $774 million and an EPS of $1.93 reflect solid profitability amid elevated interest expense and a meaningful operating margin of roughly 19.8%. The company generated healthy operating cash flow of $2.353 billion and free cash flow of $2.353 billion, contributing to a strong liquidity position, while cash at period end stood at $14.755 billion against long-term debt of $15.462 billion, yielding a net debt position of $0.751 billion.
The balance sheet remains sizable and well-capitalized, with total assets of $119.463 billion and total stockholders’ equity of $16.58 billion. The liquidity framework is reinforced by substantial cash and short-term investments (~$17.8 billion combined) and a modest leverage profile, as evidenced by a debt-to-capitalization ratio of about 0.483 and a debt-to-equity ratio around 0.933. Profitability metrics show a net income margin of ~15.7% and an operating income margin of ~19.8%, supported by an EBITDA of approximately $1.093 billion. The company also reported a payout ratio near 15.2% and a dividend yield around 0.47%, signaling a measured approach to capital returns.
Given the absence of explicit forward guidance in the provided data for QQ4 2024, our view emphasizes Synchrony’s earnings quality, cash generation, and balance-sheet stability as the core drivers of long-term value. The business remains anchored by cobranded card programs, CareCredit and other healthcare finance offerings, as well as a broad retail partner ecosystem. Investors should monitor credit quality metrics, reserve adequacy, partner health, and any updated guidance on 2025 targets as macroeconomic conditions evolve.
Key Performance Indicators
Revenue
4.92B
QoQ: -16.68% | YoY:34.44%
Gross Profit
2.24B
45.54% margin
QoQ: -28.46% | YoY:-17.16%
Operating Income
973.00M
QoQ: -49.90% | YoY:80.52%
Net Income
774.00M
QoQ: -1.90% | YoY:75.91%
EPS
1.93
QoQ: -1.53% | YoY:85.58%
Revenue Trend
Margin Analysis
Key Insights
Revenue: $4.919B in Q4 2024; YoY +34.4%; QoQ -16.7%
Gross Profit: $2.240B; Gross margin 45.54% (4Q 2024); YoY margin change negative due to mix and pricing dynamics; QoQ decline ~28.46%
- Revenue: $4.919B in Q4 2024; YoY +34.4%; QoQ -16.7%
- Gross Profit: $2.240B; Gross margin 45.54% (4Q 2024); YoY margin change negative due to mix and pricing dynamics; QoQ decline ~28.46%
- Operating Income: $973M; Operating margin 19.78%; YoY +80.52%; QoQ -49.90%
- Net Income: $774M; Net margin 15.73%; YoY +75.91%; QoQ -1.90%
- EPS: $1.93 (diluted $1.91); YoY +85.58%; QoQ -1.53%
- EBITDA: $1.093B; EBITDARatio ~0.222
- Cash Flow: Operating cash flow $2.353B; Free cash flow $2.353B; Net cash provided by operating activities $2.353B; Net cash used in investing activities -$4.963B; Net cash used in financing activities -$0.617B; Cash at end of period $14.755B; Cash from operating activities yield supported by high collections and working capital management
- Balance Sheet: Total assets $119.463B; Total liabilities $102.883B; Total stockholders’ equity $16.58B; Cash & equivalents $14.711B; Long-term debt $15.462B; Net debt $0.751B; Current ratio/quick ratio not disclosed; Leverage metrics show a Debt-to-Capitalization ~0.483 and Debt-to-Equity ~0.933
- Valuation and Returns: Price-to-book ~1.53; Price-to-sales ~5.15; Price-to-earnings ~8.18; Dividend yield ~0.47%; Dividend payout ~15.2%; Operating cash flow per share ~$6.04; Free cash flow per share ~same as FCF per share; ROE ~4.67%; ROA ~0.65%; Asset turnover ~0.041; Cash flow coverage and efficiency ratios indicate healthy cash generation relative to equity
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
4.92B
34.44%
-16.68%
Gross Profit
2.24B
-17.16%
-28.46%
Operating Income
973.00M
80.52%
-49.90%
Net Income
774.00M
75.91%
-1.90%
EPS
1.93
85.58%
-1.53%
Key Financial Ratios
grossProfitMargin
79.7%
operatingProfitMargin
23.9%
netProfitMargin
15.7%
returnOnAssets
0.65%
returnOnEquity
4.67%
debtEquityRatio
0.93
operatingCashFlowPerShare
$6.04
freeCashFlowPerShare
$6.04
dividendPayoutRatio
15.2%
priceToBookRatio
1.53
priceEarningsRatio
8.18
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript was provided in the supplied data, so there are no management quotes or theme-specific highlights available. Highlights below are based on the disclosed results and typical quarterly commentary in the sector:
- Strategy/Portfolio mix: Synchrony’s strength rests on cobranded card programs and healthcare financing (CareCredit) with a broad retailer network. Management typically emphasizes the stickiness and cross-sell opportunities within partner ecosystems.
- Operating discipline: The significant QoQ revenue decline suggests seasonality and mix effects, underscoring the importance of cost controls and portfolio optimization to sustain margins during softer periods.
- Capital return: The company maintains a modest, disciplined capital return policy (payout ~15.2%), with share repurchases and dividends aligned to cash flow generation; any change in buyback cadence would be a key investor focus.
- Credit quality and liquidity: Given large cash reserves and a robust liquidity position, management’s ongoing focus is likely on credit performance, reserve adequacy, and the balance between growth in cobranded programs and risk controls.
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Forward Guidance
There is no explicit QQ4 2024 forward guidance in the provided data. Based on the results, the following forward-looking assessment applies:
- Base case: Moderate growth in loan balances driven by existing retailer partnerships and healthcare financing, supported by strong operating cash flows and a stable capital position. Expect revenue to normalize after the YoY uplift in QQ4 2024, with margins sustaining around mid-teens in net profit terms if credit costs remain contained.
- Bear case: A weaker consumer environment leading to higher delinquencies or reserve builds could pressure profitability and cash flow, offsetting the benefits of scale and partner network.
- Bull case: Accelerated growth in cobranded programs, healthier merchant acceptance, and continued efficiency gains could lift revenue growth and sustain higher free cash flow.
- Key factors to monitor: consumer credit quality and reserve levels; delinquencies and charge-offs; evolution of loan balances in cobranded programs; partner health and merchant network expansion; updates to 2025 targets and any changes to capital return policy.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0LC3.L Focus
45.54%
23.90%
4.67%
8.18%
0JR2.L
36.10%
28.90%
2.17%
22.97%
0IRE.L
60.30%
19.20%
2.05%
30.94%
0JQR.L
0.00%
-21.00%
-1.34%
-17.47%
0J5Q.L
56.00%
23.90%
3.48%
26.58%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Synchrony presents a defensible, cash-generative business with a diversified consumer finance platform anchored by cobranded card programs and healthcare financing. The QQ4 2024 results show meaningful YoY revenue growth and resilient profitability, underpinned by robust operating cash flow and a strong liquidity cushion. However, the QoQ decline in revenue and the elevated interest expense highlight sensitivity to seasonality and rate environment. The balance sheet remains sturdy, with manageable net debt and ample liquidity to support ongoing investments, buybacks, and potential dividend actions. Valuation appears reasonable relative to peers, with a P/E around 8.2x and a P/B near 1.5x, suggesting potential upside if growth re-accelerates and credit costs stay contained.
Investment thesis: Favorable long-term earnings durability supported by diversified partner relationships, scalable healthcare financing, and strong cash generation. Risks revolve around consumer credit quality, partner concentration, and macro headwinds. Investors should monitor quarterly credit metrics (delinquencies, charge-offs, reserve levels), partner health signals, and any updated 2025 guidance to gauge whether revenue growth can re-accelerate and whether the company can sustain its cash-flow-centric model in a evolving macro backdrop.
Key Investment Factors
Growth Potential
Expansion of cobranded and private-label card programs, enhanced cross-sell through CareCredit and other healthcare financing, and ongoing digital platform enhancements to grow average loan balances and merchant acceptance. Potential upside from higher merchant spend and incremental fee-based revenues from financing solutions across retail and healthcare verticals.
Profitability Risk
Credit risk from consumer portfolios in a rising-rate and slower-growth environment; dependence on retailer ecosystem and partner health; competition from banks and fintech entrants; regulatory and compliance risk; cyclical consumer spending impacting loan growth and charge-offs.
Financial Position
Strong liquidity with cash and equivalents of ~$14.7B and total current assets around $17.9B; net debt of $0.751B indicating manageable leverage; solid free cash flow generation supports potential capital returns and debt management; reasonable valuation with P/E ~8.2x and P/B ~1.53x; diversified revenue sources mitigate concentration risk.
SWOT Analysis
Strengths
Large-scale consumer finance platform with extensive cobranded and private-label card programs
Strong operating cash flow and free cash flow generation
Robust liquidity position (cash and short-term investments) and solid balance sheet
Diversified revenue streams including CareCredit healthcare financing and a broad retail partner network
Weaknesses
Revenue and margin volatility linked to quarterly seasonality and partner mix
Higher dependence on retailer partners exposing the business to retail cycle dynamics
Elevated interest expense in the period which could compress margins in a higher-rate environment
Opportunities
Expanded cobranded card programs and retailer partnerships
Growth opportunities in CareCredit and other healthcare financing platforms
Continued digital transformation to improve merchant acceptance and cross-sell opportunities
Potential expansion into new products or geographies leveraging existing capital base
Threats
Macro downturn impacting consumer credit quality and loan losses
Intense competition from banks and fintechs in cobranded and private-label cards
Regulatory changes and interest-rate volatility affecting profitability and credit costs