Reviewing Synchrony Financial (NYSE:SYF) and Vroom (NASDAQ:VRM)

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

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Vroom and Synchrony Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vroom	1	0	0	0	1.00
Synchrony Financial	0	6	9	0	2.60

Synchrony Financial has a consensus target price of $89.00, indicating a potential upside of 24.44%. Given Synchrony Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Synchrony Financial is more favorable than Vroom.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vroom	-32.38%	-47.65%	-5.59%
Synchrony Financial	15.44%	23.09%	2.98%

Institutional and Insider Ownership

25.8% of Vroom shares are held by institutional investors. Comparatively, 96.5% of Synchrony Financial shares are held by institutional investors. 2.9% of Vroom shares are held by company insiders. Comparatively, 0.4% of Synchrony Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Vroom and Synchrony Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vroom	$178.83 million	0.27	-$7.96 million	($11.12)	-0.84
Synchrony Financial	$22.60 billion	1.03	$3.55 billion	$9.76	7.33

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

Risk and Volatility

Vroom has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500. Comparatively, Synchrony Financial has a beta of 1.32, suggesting that its share price is 32% more volatile than the S&P 500.

Summary

Synchrony Financial beats Vroom on 13 of the 14 factors compared between the two stocks.

About Vroom

Vroom, Inc. operates as an automotive finance company. The company offers vehicle financing to its customers through third party dealers under the UACC brand. It also provides artificial intelligence powered analytics and digital services to dealers, automotive financial services companies, and others in the automotive industry for automotive retail. The company was formerly known as Auto America, Inc. and changed its name to Vroom, Inc. in July 2015. Vroom, Inc. was incorporated in 2012 and is based in Houston, Texas.

About Synchrony Financial

Synchrony Financial, together with its subsidiaries, operates as a consumer financial services company in the United States. It provides credit products, such as credit cards, commercial credit products, and consumer installment loans. The company also offers private label credit cards, dual co-brand and general purpose credit cards, short- and long-term installment loans, and consumer banking products; and deposit products, including certificates of deposit, individual retirement accounts, money market accounts, and savings accounts, and sweep and affinity deposits, as well as accepts deposits through third-party securities brokerage firms. In addition, it provides debt cancellation products to its credit card customers through online, mobile, and direct mail; and healthcare payments and financing solutions under the CareCredit and Walgreens brands; payments and financing solutions in the apparel, specialty retail, outdoor, music, and luxury industries, such as American Eagle, Dick's Sporting Goods, Guitar Center, Kawasaki, Pandora, Polaris, Suzuki, and Sweetwater. 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. It serves digital, health and wellness, retail, home, auto, telecommunications, jewelry, pets, and other industries. The company was founded in 1932 and is headquartered in Stamford, Connecticut.