Home News Ally Financial Stock Jumps More Than 10% After Strong Q4 Results, Dealing with Synchronicity

Ally Financial Stock Jumps More Than 10% After Strong Q4 Results, Dealing with Synchronicity

by SuperiorInvest

Key takeaways

  • Ally Financial reported strong fourth-quarter results and announced a deal with Synchrony Financial.
  • Ally’s earnings per share (EPS) and revenue came in above analyst estimates.
  • The financial services provider sold its point-of-sale financing arm to Synchrony, in a deal that includes $2.2 billion in loan receivables.
  • Ally’s stock price hit its highest level since August 2022.

Ally Financial (ALLY) shares rose on Friday as the company reported better-than-expected results and announced it would sell its point-of-sale financing arm to Synchrony Financial (SYF).

Ally, known primarily as an auto loan provider, posted fourth-quarter earnings per share (EPS) of $0.45, with total net revenue of $2.1 billion. Both beat analyst estimates.

The company said net financial income in its auto financing business rose by $5 million to $1.3 billion, driven by higher interest rates. Pretax income at its insurance unit rose $28 million to $129 million, mainly due to high premiums earned.

In a separate statement, Ally said the deal with Synchrony includes $2.2 billion in loan receivables. She added that the portfolio “includes relationships with nearly 2,500 business locations and supports more than 450,000 active borrowers in home improvement and healthcare services.”

Ally CEO Jeff Brown said selling the Ally Lending division was part of “a broader initiative to invest resources in businesses of increasing scale and strengthen relationships with dealer customers and consumers.”

Financial considerations for the purchase were not disclosed. The transaction is expected to close in the current quarter.

Ally Financial shares rose 10.4% to $35.46 about a half-hour before the closing bell on Friday, trading at their highest level since August 2022. Synchrony Financial shares rose 3.1% at $36.89.

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