Synchrony Financial Has A Great Story To Tell

Sep. 25, 2019 4:04 PM ETSynchrony Financial (SYF)10 Comments
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WG Investment Research


  • Synchrony's stock has performed extremely well so far in 2019 (after a tough 2018).
  • Synchrony continues to report strong operating results, and its management team has done a great job changing the narrative.
  • I am long Synchrony, and I plan to add to my position on pullbacks.
  • This idea was discussed in more depth with members of my private investing community, Going Long With W.G.. Get started today »

Synchrony Financial's (NYSE:SYF) stock has been lost in the shuffle, as the trade war and other macro concerns have taken center stage. However, SYF shares have recently made a comeback as shown by the fact that the stock has significantly outperformed the market so far in 2019.

ChartData by YCharts

The strong stock performance in 2019 has been great, but, in my opinion, SYF shares still have a lot of room to run. This company has faced stiff headwinds over the last few years, and as a direct result, the stock did not perform well in 2017/2018. Looking ahead, I believe that long-term shareholders should seriously consider staying the course because this company has a great story to tell.

Then To Now

Synchrony is a unique company that is a market leader in the private-label credit card space. The company was originally spun out of General Electric (GE) in mid-2014 and the stock performance has been lackluster since that point in time.

ChartData by YCharts

Prior to 2019, Synchrony was viewed as a unique company that had elevated risk levels (weak underwriting standards and a low-quality asset portfolio). And 2018 turned out to be a tough year for Synchrony's management team (notice the steep drop in the stock price) as analysts questioned the company's quality of its asset portfolio and how the business would perform during an economic slowdown. Enter 2019 and the thought that the U.S. would not be in a recession in the near[ish] future.

Synchrony has been able to report strong operating results so far in 2019, and more importantly, management has been able to positively impact investor sentiment after a year (i.e., 2018) that most shareholders likely want to forget about. As I recently described here, there are 4 main factors that has had a material

ChartData by YCharts

ChartData by YCharts

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This article was written by

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Our President and CIO is a CPA with experience in public accounting and the financial services industry. He earned his Master of Accountancy degree in 2008 and his B.S. in Business Management in 2007. He is also a Level III CFA candidate. He has been intrigued by the market from the start. Over the years, he has learned that long-term investing is a discipline that, if followed, will help contribute to building lasting wealth. As such, most of our articles will be about the investments that we plan to hold for at least 3 to 5 years, as long as the company's story does not change. As a Seeking Alpha contributor, our main goal is to write about the companies that are key to our portfolio with the hope of promoting discussion (for or against the investment) from others within the SA community.Please visit our website for more information about W.G. Investment Research LLC.

Disclosure: I am/we are long SYF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: This article is not a recommendation to buy or sell any stock mentioned. These are only my personal opinions. Every investor must do his/her own due diligence before making any investment decision.

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