Synchrony Financial vs. Mastercard: Which Consumer Finance Stock is a Better Buy?

NYSE: SYF | Synchrony Financial  News, Ratings, and Charts

SYF – Synchrony Financial (SYF) and Mastercard (MA) are two of the top financial stocks in the market. One key difference between the two is that MA is a payment processor, while SYF assumes credit risk for merchants. Patrick Ryan breaks down which stock is the better buy.

Consumer finance stocks are front and center now that people are returning to spending as usual. Personal savings reached all-time highs during the pandemic. However, the pendulum will inevitably swing back the other way as consumers gear up for a spending spree unlike any ever seen before.

 

If your portfolio does not include a consumer finance stock, you should consider adding at least one before the economy hits its stride. The return to normal has the potential to steer that much more money toward the top players in this space.
 
Let’s shift our attention to a couple consumer finance stocks worthy of investors’ attention: Synchrony Financial (SYF) and Mastercard (MA).
 
SYF

SYF is a leading consumer financial services business. SYF provides a litany of products via an array of retailers, buying groups, manufacturers, local merchants, wellness providers and industry associations across the nation. SYF is the country’s largest private label credit card provider. The company also provides financing, payment and analytics solutions.

SYF has a forward P/E ratio of 8.18. This ratio is comparably low, indicating SYF might be underpriced at its current trading price of $48.64. SYF has a beta of 1.82. This is a reasonable beta so SYF probably won’t fluctuate much should the market get rocky.

SYF has a B POWR Rating grade. SYF has Bs in the Momentum, Quality and Sentiment components of the POWR Ratings. The stock has Cs in the Value and Growth components. Click here to find out how SYF fares in the Stability component of the POW Rating.

SYF is ranked fifth of 51 stocks in the Consumer Financial Services space. You can find out more about the stocks in this space by clicking here.

The top analysts have established an average price target of $53.53 for SYF. If the stock hits this price point, it will have popped by about 10%. The highest analyst target price for SYF is $63. The lowest analyst target price for the stock is $40. Of the 19 analysts to have issued SYF recommendations, four consider the stock a Strong Buy, 12 consider it a Buy and three consider it a Hold.

MA

MA, a consumer finance company appropriately based in Purchase, NY, has been in business since 1966. MA provides all sorts of payment-related services. MA payment solutions range from payment programs to processing, information services and more. The company’s global transaction processing and payment services are used around the clock throughout the entirety of the year.

MA has a forward P/E ratio of 49.49. This is a fairly high ratio. However, MA is approaching its 52-week high of $401.50. The stock is currently priced around $383. MA’s 52-week low is $281.20. MA has a beta of 1.18. This is a fairly low beta that indicates the stock is unlikely to make a significant move should the market drastically fluctuate.

MA has a C POWR Rating grade. The stock has Bs in the Momentum, Sentiment and Stability components of the POWR Ratings. MA has Cs in the Quality and Growth components. Click here to find out how MA fares in the Value components of the POWR Ratings.

Of the 51 stocks in the Consumer Financial Services sector, MA is ranked 26th. You can find out more about the stocks in this sector by clicking here.

MA will move higher if the analysts’ predictions turn out to be correct. The average analyst price target for the stock is $431.07. If MA reaches this price point, it will have jumped by more than 15% in value. The analysts’ highest target price for the stock is $460.

Which is the Better Buy?

SYF is the better of these two stocks. SYF has a B POWR Rating. MA has a C POWR Rating. SYF does not have a single POWR Rating component rating grade worse than C. The same cannot be said of MA. Do not hesitate to add SYF to your portfolio.


SYF shares were trading at $47.53 per share on Thursday afternoon, up $0.03 (+0.06%). Year-to-date, SYF has gained 38.46%, versus a 17.06% rise in the benchmark S&P 500 index during the same period.


About the Author: Patrick Ryan


Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
SYFGet RatingGet RatingGet Rating
MAGet RatingGet RatingGet Rating

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