Contrasting Synchrony Financial (SYF) and Consumer Portfolio Services (CPSS)

Synchrony Financial (NYSE: SYF) and Consumer Portfolio Services (NASDAQ:CPSS) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, profitability, valuation, risk, institutional ownership and earnings.

Dividends

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Synchrony Financial pays an annual dividend of $0.60 per share and has a dividend yield of 1.8%. Consumer Portfolio Services does not pay a dividend. Synchrony Financial pays out 24.9% of its earnings in the form of a dividend.

Risk & Volatility

Synchrony Financial has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Consumer Portfolio Services has a beta of 1.8, suggesting that its stock price is 80% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Synchrony Financial and Consumer Portfolio Services, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Synchrony Financial 0 8 12 0 2.60
Consumer Portfolio Services 0 0 1 0 3.00

Synchrony Financial presently has a consensus price target of $37.94, indicating a potential upside of 16.72%. Consumer Portfolio Services has a consensus price target of $6.00, indicating a potential upside of 59.15%. Given Consumer Portfolio Services’ stronger consensus rating and higher probable upside, analysts clearly believe Consumer Portfolio Services is more favorable than Synchrony Financial.

Valuation and Earnings

This table compares Synchrony Financial and Consumer Portfolio Services’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Synchrony Financial $16.70 billion 1.48 $1.94 billion $2.41 13.49
Consumer Portfolio Services $434.38 million 0.19 $3.76 million $0.04 94.27

Synchrony Financial has higher revenue and earnings than Consumer Portfolio Services. Synchrony Financial is trading at a lower price-to-earnings ratio than Consumer Portfolio Services, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Synchrony Financial and Consumer Portfolio Services’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Synchrony Financial 11.75% 14.62% 2.27%
Consumer Portfolio Services 0.87% 9.88% 0.77%

Insider & Institutional Ownership

88.6% of Synchrony Financial shares are held by institutional investors. Comparatively, 47.2% of Consumer Portfolio Services shares are held by institutional investors. 0.0% of Synchrony Financial shares are held by insiders. Comparatively, 37.5% of Consumer Portfolio Services shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

Synchrony Financial beats Consumer Portfolio Services on 10 of the 16 factors compared between the two stocks.

Synchrony Financial Company Profile

Synchrony Financial is a consumer financial services company. The Company provides a range of credit products through programs it has established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers. The Company’s revenue activities are managed through three sales platforms: Retail Card, Payment Solutions and CareCredit. It offers its credit products through its subsidiary, Synchrony Bank (the Bank). Through the Bank, it offers a range of deposit products insured by the Federal Deposit Insurance Corporation (FDIC), including certificates of deposit, individual retirement accounts (IRAs), money market accounts and savings accounts. The Company offers three types of credit products: credit cards, commercial credit products and consumer installment loans. The Company also offers a debt cancellation product. It offers two types of credit cards: private label credit cards and Dual Cards.

Consumer Portfolio Services Company Profile

Consumer Portfolio Services, Inc. is a specialty finance company. The Company’s business is to purchase and service retail automobile contracts originated primarily by franchised automobile dealers and by select independent dealers in the United States in the sale of new and used automobiles, light trucks and passenger vans. Through its automobile contract purchases, the Company provides indirect financing to the customers of dealers having limited credit histories, low incomes or past credit problems, who it refers to as sub-prime customers. It serves as an alternative source of financing for dealers, facilitating sales to customers. The Company offers approximately eight financing programs to its dealership customers and prices each program according to the relative credit risk. Its financing programs are Bravo, First Time Buyer, Mercury/Delta, Standard, Alpha, Alpha Plus, Super Alpha and Preferred.

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