Synchrony Financial (NYSE:SYF) and LexinFintech (NASDAQ:LX) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, valuation, profitability, earnings and institutional ownership.

Profitability

This table compares Synchrony Financial and LexinFintech’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Synchrony Financial 15.45% 19.41% 2.75%
LexinFintech 15.33% 47.96% 7.11%

Analyst Recommendations

This is a summary of recent ratings for Synchrony Financial and LexinFintech, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Synchrony Financial 0 6 9 0 2.60
LexinFintech 0 0 2 0 3.00

Synchrony Financial presently has a consensus price target of $37.69, indicating a potential upside of 14.78%. LexinFintech has a consensus price target of $18.00, indicating a potential upside of 73.24%. Given LexinFintech’s stronger consensus rating and higher possible upside, analysts plainly believe LexinFintech is more favorable than Synchrony Financial.

Risk & Volatility

Synchrony Financial has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, LexinFintech has a beta of 2.21, suggesting that its stock price is 121% more volatile than the S&P 500.

Dividends

Synchrony Financial pays an annual dividend of $0.84 per share and has a dividend yield of 2.6%. LexinFintech does not pay a dividend. Synchrony Financial pays out 22.5% of its earnings in the form of a dividend. Synchrony Financial has increased its dividend for 2 consecutive years.

Insider & Institutional Ownership

85.8% of Synchrony Financial shares are owned by institutional investors. Comparatively, 8.8% of LexinFintech shares are owned by institutional investors. 0.1% of Synchrony Financial shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Synchrony Financial and LexinFintech’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Synchrony Financial $18.25 billion 1.28 $2.79 billion $3.74 8.78
LexinFintech $857.97 million 1.98 $36.94 million $0.22 47.23

Synchrony Financial has higher revenue and earnings than LexinFintech. Synchrony Financial is trading at a lower price-to-earnings ratio than LexinFintech, indicating that it is currently the more affordable of the two stocks.

Summary

Synchrony Financial beats LexinFintech on 9 of the 17 factors compared between the two stocks.

About Synchrony Financial

Synchrony Financial operates as a consumer financial services company in the United States. The company offers private label credit cards, dual cards, general purpose co-branded credit cards, and small and medium-sized business credit products; and promotional financing for consumer purchases, such as private label credit cards and installment loans. It also provides promotional financing to consumers for health, veterinary and personal care procedures, and services and products, such as dental, vision, audiology, and cosmetic; debt cancellation products; and deposit products, including certificates of deposit, individual retirement accounts, money market accounts, and savings accounts to retail and commercial customers, as well as accepts deposits through third-party securities brokerage firms. The company offers its credit products through programs established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations, and healthcare service providers; and deposit products through various channels, such as digital and print. Synchrony Financial was incorporated in 2003 and is headquartered in Stamford, Connecticut.

About LexinFintech

LexinFintech Holdings Ltd., through its subsidiaries, operates as an online consumer finance platform for young adults in the People's Republic of China. The company operates Fenqile, an online consumer finance platform that offers personal installment loans, installment purchase loans, and other loan products, as well as Le Card credit line. It also matches customer loans with diversified funding sources, including individual investors on its Juzi Licai online investment platform, institutional funding partners in its direct lending programs, and investors of its asset-backed securities. The company was formerly known as Staging Finance Holding Ltd. and changed its name to LexinFintech Holdings Ltd. in March 2017. LexinFintech Holdings Ltd. was founded in 2013 and is headquartered in Shenzhen, the People's Republic of China.

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