Synchrony Financial (SYF, Financial), a General Electric Co. (GE, Financial) spinoff and large holding of Warren Buffett (Trades, Portfolio) and Seth Klarman (Trades, Portfolio), said on Friday that second-quarter net interest income increased 3% on strong loan receivables growth.
The Stamford, Connecticut-based company reported net earnings of $696 million, up $200 million from the prior-year quarter. Earnings per share were 92 cents, outperforming the consensus estimate by 10 cents.
Company strikes deal with PayPal
Synchrony Financial CEO Margaret Keane said the company continues to drive organic growth through new programs and key partnerships, including Haverty Furniture Companies Inc. (HVT, Financial) and Sleep Number Corp. (SNBR, Financial). Net interest income increased to $3.7 billion, primarily due to a 5% increase in period-end loan receivables.
Keane also mentioned that Synchrony Financial established a partnership with Daniel Loeb (Trades, Portfolio) target PayPal Holdings Inc. (PYPL, Financial), a company that offers “strong engagement, significant growth opportunities and good economic alignment” according to the CEO. The partnership enables Synchrony Financial to “leverage new opportunities” and drive growth within the company.
Stock still falls on Walmart partnership termination
Although the company increased its dividend to 21 cents per share and outperformed bottom-line consensus estimates, Synchrony Financial still traded approximately 1.5% lower than its previous close on news that Walmart Inc. (WMT, Financial) terminated the company’s credit-card partnership in favor of Capital One Financial Corp. (COF, Financial).
GuruFocus ranks Synchrony Financial’s financial strength a weak 3 out of 10 as the company’s equity-to-asset ratio of 0.15 underperforms 83% of global competitors.
Disclosure: no positions.
