Will Synchrony Financial (SYF) Stock Be Helped by GE Share Exchange?
NEW YORK (TheStreet) -- GE announced the final exchange ratio for its share swap with Synchrony Financial (SYF) - Get Report after the market close on Thursday.
Last year, Synchrony Financial spun off from GE, which plans to soon split off its roughly 85% holding in the company in an exchange offer for its own stock.
Each eligible share of GE will be exchanged for 1.0505 shares of Synchrony, as long as the offer is not oversubscribed.
The transaction equates to about $20.2 billion in GE stock buyback.
Additionally, last month the Federal Reserve approved Synchrony's spin-off from GE, and a finalized exchange offer will allow Synchrony to be an independent, publicly held company, Credit Suisse analysts said, according to Barron's.
"We believe SYF will file a capital plan with the Fed in a few months and expect to hear an update by mid- 2016," Credit Suisse adds, Barron's notes.
Shares of Synchrony are declining by 0.36% to $30.68 on heavy volume in late afternoon trading on Friday. About 19.67 million shares of Synchrony have been traded so far today, nearly double the company's average trading volume of about 10.74 million shares a day.
Synchrony is a financial services company based in Stamford, CT.
Separately, TheStreet Ratings team rates SYNCHRONY FINANCIAL as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
We rate SYNCHRONY FINANCIAL (SYF) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance and notable return on equity. However, as a counter to these strengths, we find that the company's profit margins have been poor overall.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 4.8%. Since the same quarter one year prior, revenues slightly increased by 8.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
- SYNCHRONY FINANCIAL's earnings per share improvement from the most recent quarter was slightly positive. This year, the market expects an improvement in earnings ($2.64 versus $1.87).
- The gross profit margin for SYNCHRONY FINANCIAL is currently lower than what is desirable, coming in at 30.18%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 16.51% is above that of the industry average.
- You can view the full analysis from the report here: SYF
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.