Synchrony Financial's Capital Efficiency Outshines Competitors

• Synchrony Financial (NYSE:SYF) demonstrates superior capital utilization with a ROIC of 20.23% and a WACC of 14.02%, resulting in a ROIC to WACC ratio of 1.44.
• Citizens Financial Group and Ally Financial show significantly lower capital efficiency compared to SYF, with ROIC to WACC ratios of 0.25 and 0.14, respectively.
• Discover Financial Services, while competitive, still trails behind SYF with a ROIC of 17.39% and a ROIC to WACC ratio of 1.34.

Synchrony Financial (NYSE:SYF) is a prominent consumer financial services company in the United States. It offers a range of credit products, including private label credit cards, dual cards, and installment loans. The company competes with other financial institutions like Citizens Financial Group, Discover Financial Services, Ally Financial, The Bank of New York Mellon, and M&T Bank Corporation.

In evaluating Synchrony Financial's performance, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. SYF boasts a ROIC of 20.23% and a WACC of 14.02%, resulting in a ROIC to WACC ratio of 1.44. This indicates that SYF is effectively generating returns well above its cost of capital, highlighting its efficiency in capital utilization.

Comparatively, Citizens Financial Group (CFG) has a ROIC of 3.62% and a WACC of 14.77%, leading to a ROIC to WACC ratio of 0.25. This suggests that CFG is not generating sufficient returns to cover its cost of capital, indicating less efficient capital use compared to SYF.

Discover Financial Services (DFS) shows a ROIC of 17.39% and a WACC of 12.94%, with a ROIC to WACC ratio of 1.34. While DFS is also generating returns above its cost of capital, it still trails behind SYF in terms of capital efficiency.

Ally Financial (ALLY) and The Bank of New York Mellon (BK) have ROIC to WACC ratios of 0.14 and 0.24, respectively, indicating that both companies are struggling to generate returns that exceed their cost of capital. M&T Bank Corporation (MTB) has a slightly better ratio of 0.55, but still falls short of SYF's performance.