Ally Financial Stock Jumps After Beating Profit Estimates and Selling Credit Card Business
KEY TAKEAWAYS
Shares of Ally Financial (ALLY) climbed over 4% on Wednesday after the company posted fourth-quarter results that surpassed analyst expectations and revealed the sale of its credit card business to CardWorks.
The all-digital bank and auto loan provider reported adjusted earnings per share of $0.78, beating forecasts, with revenue at $2.03 billion, a 2.4% year-over-year decline. Despite the revenue dip, both metrics outperformed estimates compiled by Visible Alpha.
CEO Michael Rhodes noted that Ally undertook "significant actions" in the quarter to strengthen its financial position. These included workforce reductions, adopting a deferral accounting method for electric vehicle leases, and revising corporate expense allocations and reporting structures.
As part of its broader strategy, Ally sold its credit card business, which had $2.3 billion in receivables and 1.3 million active cardholders as of year-end, to CardWorks and its subsidiary Merrick Bank. While the financial terms were not disclosed, Rhodes emphasized that the divestment aligns with Ally's mission to focus on its core businesses and improve returns.
CardWorks CEO Dan Pillemer said the acquisition will expand the company's near-prime credit card portfolio, with the deal expected to close this year.
Ally Financial's stock rose to $39.84 in intraday trading and has gained 11% year-to-date, reflecting positive investor sentiment following the announcement.
KEY TAKEAWAYS
- Ally Financial reported stronger-than-expected Q4 earnings and revenue, driven by cost-cutting measures.
- The company sold its credit card portfolio, valued at $2.3 billion, to CardWorks to streamline operations.
- CEO Michael Rhodes highlighted the company's focus on simplifying its structure and boosting core business performance.
Shares of Ally Financial (ALLY) climbed over 4% on Wednesday after the company posted fourth-quarter results that surpassed analyst expectations and revealed the sale of its credit card business to CardWorks.
The all-digital bank and auto loan provider reported adjusted earnings per share of $0.78, beating forecasts, with revenue at $2.03 billion, a 2.4% year-over-year decline. Despite the revenue dip, both metrics outperformed estimates compiled by Visible Alpha.
CEO Michael Rhodes noted that Ally undertook "significant actions" in the quarter to strengthen its financial position. These included workforce reductions, adopting a deferral accounting method for electric vehicle leases, and revising corporate expense allocations and reporting structures.
As part of its broader strategy, Ally sold its credit card business, which had $2.3 billion in receivables and 1.3 million active cardholders as of year-end, to CardWorks and its subsidiary Merrick Bank. While the financial terms were not disclosed, Rhodes emphasized that the divestment aligns with Ally's mission to focus on its core businesses and improve returns.
CardWorks CEO Dan Pillemer said the acquisition will expand the company's near-prime credit card portfolio, with the deal expected to close this year.
Ally Financial's stock rose to $39.84 in intraday trading and has gained 11% year-to-date, reflecting positive investor sentiment following the announcement.