Using an unlevered Free Cash Flow to Firm (FCFF) model, we project Synchrony Financial's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from -18.6% to 14.2% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 45, DPO 30, DIO 60). At a 10.0% WACC with mid-year discounting, the terminal value (77% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 11.4x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $236.20 per share, suggesting SYF is undervalued by 253.1% at the current price of $66.90.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 4,003 | 4,206 | 4,418 | 4,323 | 4,939 | 5,062 |
| (−) Net Interest | 2,679 | 2,815 | 2,957 | 2,893 | 3,305 | 3,388 |
| (+) D&A | 0 | 156 | 319 | 491 | 659 | 675 |
| EBITDA | 6,682 | 7,176 | 7,694 | 7,707 | 8,902 | 9,125 |
| (−) Tax | 932 | 979 | 1,028 | 1,006 | 1,150 | — |
| (−) CapEx | 778 | 817 | 859 | 840 | 960 | — |
| (−) ΔWC | 2,462 | 124 | 131 | -59 | 378 | — |
| Free Cash Flow (FCF) | 2,511 | 5,255 | 5,676 | 5,919 | 6,414 | — |
| Peers' EBITDA Multiple | 11.4x | |||||
| Terminal Value | 104,480 | |||||
| WACC / Discount Rate | 9.99% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,394 | 4,555 | 4,473 | 4,241 | 4,179 | 64,897 |
| Enterprise Value | 84,739 | |||||
| Projection Period | 19,842 | 23.4% | ||||
| Terminal Value | 64,897 | 76.6% | ||||
| (−) Current Net Debt | 209 | |||||
| Equity Value | 84,530 | |||||
| (÷) Outstanding Shares | 358M | |||||
| Fair Price | $236 | +253.1% | ||||
| WACC \ EV/EBITDA Exit Multiple | 7.4x | 9.4x | 11.4x | 13.4x | 15.4x |
|---|---|---|---|---|---|
| 8.0% | $187 | $222 | $256 | $291 | $326 |
| 9.0% | $180 | $213 | $246 | $279 | $312 |
| 10.0% | $173 | $205 | $236 | $268 | $300 |
| 11.0% | $166 | $197 | $227 | $257 | $287 |
| 12.0% | $160 | $189 | $218 | $247 | $276 |
Current price: $66.90. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.