First Cash (NYSE: FCFS) and Synchrony Financial (NYSE:SYF) are both mid-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Cash $1.09 billion 2.90 $60.12 million $2.34 28.59
Synchrony Financial $15.12 billion 1.85 $2.25 billion $2.62 13.64

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

Volatility and Risk

First Cash has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Synchrony Financial has a beta of 1.02, meaning that its stock price is 2% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
First Cash 6.41% 8.45% 5.91%
Synchrony Financial 13.17% 14.84% 2.34%

Dividends

First Cash pays an annual dividend of $0.80 per share and has a dividend yield of 1.2%. Synchrony Financial pays an annual dividend of $0.60 per share and has a dividend yield of 1.7%. First Cash pays out 34.2% of its earnings in the form of a dividend. Synchrony Financial pays out 22.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Synchrony Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current ratings for First Cash and Synchrony Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Cash 0 2 5 0 2.71
Synchrony Financial 0 10 10 0 2.50

First Cash currently has a consensus target price of $64.00, indicating a potential downside of 4.33%. Synchrony Financial has a consensus target price of $36.67, indicating a potential upside of 2.60%. Given Synchrony Financial’s higher possible upside, analysts clearly believe Synchrony Financial is more favorable than First Cash.

Institutional and Insider Ownership

95.8% of First Cash shares are held by institutional investors. Comparatively, 85.7% of Synchrony Financial shares are held by institutional investors. 2.8% of First Cash shares are held by company insiders. Comparatively, 0.0% 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 will outperform the market over the long term.

Summary

Synchrony Financial beats First Cash on 10 of the 16 factors compared between the two stocks.

First Cash Company Profile

FirstCash, Inc., formerly First Cash Financial Services, Inc., is an operator of retail-based pawn stores in the United States and Latin America. The Company’s primary business is the operation of full-service pawn stores, which make small pawn loans secured by personal property, such as consumer electronics, jewelry, power tools, household appliances, sporting goods and musical instruments. The Company’s operates through two segments: the U.S. operations segment and the Latin America operations segment. The U.S. operations segment consists of all pawn and consumer loan operations in the United States and the Latin America operations segment consists of all pawn and consumer loan operations in Latin America, which includes operations in Mexico, Guatemala and El Salvador. In addition, some of the Company’s pawn stores offer small unsecured consumer loans or credit services products. The Company also operates consumer finance stores in Texas and Mexico.

Synchrony Financial Company Profile

Synchrony Financial is a consumer financial services company. The Company provides a range of credit products through programs it has established with a group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers. The Company’s revenue activities are managed through three sales platforms: Retail Card, Payment Solutions and CareCredit. It offers its credit products through its subsidiary, Synchrony Bank (the Bank). Through the Bank, it offers a range of deposit products insured by the Federal Deposit Insurance Corporation (FDIC), including certificates of deposit, individual retirement accounts (IRAs), money market accounts and savings accounts. The Company offers three types of credit products: credit cards, commercial credit products and consumer installment loans. The Company also offers a debt cancellation product. It offers two types of credit cards: private label credit cards and Dual Cards.

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