Synchrony Earnings: Strong Revenue and More Than Offsets Higher Credit Costs and Drives EPS Growth

No-moat-rated Synchrony Financial reported solid second-quarter results as higher credit costs were more than offset by strong revenue growth and excellent cost management. Net revenue increased 12.7% from last year to $3.7 billion. Meanwhile, diluted earnings per share increased to $1.55 from $1.32 last year, which translates to a return on equity of 16.7%. As we incorporate these results, we do not expect to materially alter our $46 per share fair value estimate. While Synchrony has had a strong start to 2024, with credit performance and loan growth coming in better than we had initially expected, the share’s strong performance so far this year has left them slightly overvalued.