Synchrony Financial (NYSE:SYF) Competes in Financial Efficiency

Synchrony Financial (NYSE:SYF) is a consumer financial services company that provides a range of credit products through programs with retailers, merchants, manufacturers, and healthcare providers. It 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. These companies are evaluated based on their ability to generate returns on invested capital relative to their cost of capital.

Synchrony Financial's ROIC is 5.01%, while its WACC is 16.14%, resulting in a ROIC to WACC ratio of 0.31. This indicates that SYF is not generating returns that exceed its cost of capital, which is a critical measure of financial efficiency. In comparison, Discover Financial Services has a slightly lower ROIC of 4.24% but a lower WACC of 12.97%, leading to a better ROIC to WACC ratio of 0.33.

Citizens Financial Group shows a ROIC of 0% against a WACC of 15.22%, resulting in a ROIC to WACC ratio of 0. This suggests that CFG is not effectively utilizing its capital to generate returns. Similarly, Ally Financial and The Bank of New York Mellon have low ROIC to WACC ratios of 0.02 and 0.03, respectively, indicating inefficiencies in capital utilization.

M&T Bank Corporation stands out with a ROIC of 5.55% and a WACC of 10.78%, achieving the highest ROIC to WACC ratio of 0.51 among the peers. This suggests that MTB is the most efficient in generating returns relative to its cost of capital, outperforming Synchrony Financial and other competitors in this analysis.