The EV/EBITDA of Synchrony Financial is 4.25
EV/EBITDA is enterprise value divided by earnings before interest, tax, depreciation, and amortization. It is a measure of how expensive a stock is and is more frequently valid for comparisons across companies than the price to earnings ratio. It measures the price (in the form of enterprise value) an investor pays for the benefit of the company’s cash flow (in the form of EBITDA).
= enterprise value / EBITDA
Price to earnings ratios are impacted by a company's choice of capital structure - companies which raise money via debt will have lower P/Es (and therefore look cheaper) than companies that raise an equivalent amount of money by issuing shares, even though the two companies might have equivalent enterprise values. A sample case is when a company with debt were to raise money by issuing shares of stock, and then used the money to pay off the debt, this company's P/E ratio would shoot up because of the increased number of shares - although nothing about the fundamental value of the business has changed. EV / EBITDA is unaffected by capital structure as enterprise value includes the value of debt, and EBITDA is available to all investors (debt and equity) as it excludes interest payments on that debt. It is ideal for analysts and potential investors looking to compare companies within the same industry.
synchrony financial is one of the premier consumer financial services companies in the united states. our roots in consumer finance trace back to 1932, and today we are the largest provider of private label credit cards in the united states based on purchase volume and receivables. we provide a range of credit products through programs we have established with a diverse group of national and regional retailers, local merchants, manufacturers, buying groups, industry associations and healthcare service providers to help generate growth for our partners and offer financial flexibility to our customers. through our partners’ more than 300,000 locations across the united states and canada, and their websites and mobile applications, we offer our customers a variety of credit products to finance the purchase of goods and services. our offerings include private label credit cards, promotional financing and installment lending, loyalty programs and optimizer+plus branded fdic-insured sa