Contrasting Vroom (NASDAQ:VRM) & Synchrony Financial (NYSE:SYF)

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

Insider & Institutional Ownership

96.5% of Synchrony Financial shares are held by institutional investors. Comparatively, 25.8% of Vroom shares are held by institutional investors. 0.4% of Synchrony Financial shares are held by insiders. Comparatively, 2.9% of Vroom shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

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

Valuation & Earnings

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

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

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.

Volatility and Risk

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

Analyst Ratings

This is a breakdown of current ratings for Synchrony Financial and Vroom, as provided by MarketBeat.

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

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

Summary

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

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.

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.