Head to Head Survey: Synchrony Financial (SYF) and Yirendai (YRD)

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Synchrony Financial (NYSE: SYF) and Yirendai (NYSE:YRD) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, valuation, risk, earnings, dividends, profitability and analyst recommendations.

Dividends

Synchrony Financial pays an annual dividend of $0.60 per share and has a dividend yield of 1.8%. Yirendai pays an annual dividend of $0.52 per share and has a dividend yield of 2.6%. Synchrony Financial pays out 22.9% of its earnings in the form of a dividend. Yirendai pays out 15.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Yirendai is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

85.7% of Synchrony Financial shares are owned by institutional investors. Comparatively, 11.5% of Yirendai shares are owned by institutional investors. 0.1% of Synchrony Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Synchrony Financial and Yirendai’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Synchrony Financial $16.70 billion 1.52 $1.94 billion $2.62 12.82
Yirendai $852.00 million 1.44 $210.83 million $3.45 5.86

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Synchrony Financial and Yirendai, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Synchrony Financial 1 4 11 0 2.63
Yirendai 0 2 3 0 2.60

Synchrony Financial presently has a consensus price target of $40.40, indicating a potential upside of 20.24%. Yirendai has a consensus price target of $47.50, indicating a potential upside of 135.15%. Given Yirendai’s higher possible upside, analysts plainly believe Yirendai is more favorable than Synchrony Financial.

Volatility and Risk

Synchrony Financial has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Yirendai has a beta of 5, indicating that its stock price is 400% more volatile than the S&P 500.

Profitability

This table compares Synchrony Financial and Yirendai’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Synchrony Financial 12.36% 15.60% 2.38%
Yirendai 21.93% 51.90% 22.44%

About Synchrony Financial

Synchrony Financial operates as a consumer financial services company in the United States. The company offers private label credit cards, dual cards, general purpose co-branded credit cards, and small and medium-sized business credit products; and promotional financing for consumer purchases, such as private label credit cards and installment loans. It also provides promotional financing to consumers for health and personal care procedures, products, or services, such as dental, veterinary, cosmetic, vision and audiology; debt cancellation products; and deposit products, including certificates of deposit, individual retirement accounts, money market accounts, and savings accounts to retail and commercial customers, as well as accepts deposits through third-party securities brokerage firms. The company offers its credit products through programs established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations, and healthcare service providers; and deposit products through multiple channels, including digital and print. Synchrony Financial was incorporated in 2003 and is headquartered in Stamford, Connecticut.

About Yirendai

Yirendai Ltd. operates as an online consumer finance marketplace that connects borrowers and investors primarily in the People's Republic of China. It offers standard loan products; and fasttrack loan products through mobile applications. The company also provides investing tools. The company was founded in 2012 and is based in Beijing, the People's Republic of China. Yirendai Ltd. is a subsidiary of Creditease Holdings (Cayman) Limited.

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