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As part of our ongoing series here at The Acquirer’s Multiple, each week we focus on one of the stocks from our Stock Screeners, and why it might be a deeply undervalued gem.

The stock this week is:

Synchrony Financial (SYF)

Synchrony Financial is a leading U.S. consumer financial services company specializing in private-label credit cards, installment lending, and savings products. It partners with major retailers and healthcare providers to offer customized financing solutions. As one of the largest issuers of store-branded credit cards in the country, Synchrony sits at the intersection of consumer credit, retail partnerships, and financial technology.

One of the metrics we use in our screens is IV/P (Intrinsic Value to Price). Let us simplify what it means:

What is IV/P (Intrinsic Value to Price)?

IV/P tells you if a stock is a good deal based on how much value you’re getting for the price you pay.

The Calculation:

It combines a stock’s earning power, growth potential, and what it’s returning to shareholders (via dividends and buybacks) to calculate its Implied Value — what the business is worth based on its fundamentals.

The Interpretation:

• IV/P > 1: You’re getting more value than you’re paying for — a potential bargain.
• IV/P < 1: You’re paying more than the business is worth — possibly overvalued.

If IV/P is very high, it signals the stock might be trading at a deep discount.

IV/P for Synchrony Financial: 2.3

Synchrony currently has an IV/P of 2.3, meaning the stock’s implied value is calculated to be 2.3 times greater than its current price. Put another way:

For every $1 you invest, you’re potentially getting $2.30 of value.

That’s a strong margin of safety, suggesting Synchrony may be significantly undervalued.

Supporting Metrics:

• Shareholder Yield: 8.21%
  This includes dividends and buybacks — a solid return of capital to shareholders.
• Free Cash Flow Yield: 44.99%
  An extremely high FCF yield, indicating exceptional cash generation relative to its market cap.
• Return on Assets (5-Year Average): 9%
  A healthy and consistent profitability signal.

Why Might Synchrony Be Undervalued?

1. Cyclical Consumer Finance Exposure
   As a provider of credit and lending, Synchrony can be sensitive to economic cycles. In times of macro uncertainty, investors often discount these stocks — even when fundamentals remain strong.
2. Misunderstood Balance Sheet
   With a negative debt-to-equity ratio due to its banking structure and capital optimization, some investors may misread its leverage and risk profile.
3. Overlooked by Growth-Focused Markets
   In a market chasing high-tech and AI narratives, solid, cash-generating financials like SYF may be passed over — despite offering value and yield.

Conclusion:

With an IV/P of 2.3, Synchrony Financial (SYF) appears to be trading at a meaningful discount to its intrinsic value. Its rare combination of a sky-high free cash flow yield, strong shareholder returns, and a proven business model in consumer finance makes it an attractive candidate for value investors. While near-term macro risks may cloud sentiment, SYF’s fundamentals point toward long-term reward for the patient buyer.

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