DETROIT - Ally Financial (NYSE:ALLY) Inc. reported a strong finish to the year with fourth-quarter earnings that surpassed expectations, leading to a significant surge in its stock price. The company announced earnings of $0.45 per share on $2 billion in revenue, marking a notable achievement for the Detroit-based financial services provider.
In a strategic move, Ally Financial also disclosed the sale of its point-of-sale financing business to Synchrony Financial (NYSE:SYF). The deal, involving loan receivables valued at $2.2 billion, is poised to enhance Ally's financial standing. It is anticipated to boost the company's common equity Tier 1 ratio—a key measure of financial strength—by approximately 15 basis points. The acquisition by Synchrony Financial will include the transfer of relationships with nearly 2,500 merchants, expanding Synchrony's reach in the point-of-sale financing market.
The announcement comes amidst a leadership shake-up at Ally Financial. Jeffrey Brown is stepping down as CEO to join Hendrick Automotive Group, and Doug Timmerman will step in as the interim CEO. This transition occurs as the company embarks on a new chapter following the divestiture of its financing arm and a robust quarterly performance that has invigorated investor confidence.
InvestingPro Insights
Ally Financial Inc. has been a topic of discussion among investors, especially after its recent fourth-quarter earnings beat and the sale of its point-of-sale financing business. To provide a clearer picture of the company's financial health and future outlook, let's consider some key metrics and insights from InvestingPro.
InvestingPro Data reveals that Ally Financial has a market capitalization of $10.74 billion and an attractive P/E ratio of 9.69, which further adjusts to 8.71 when considering the last twelve months as of Q3 2023. Despite a decrease in revenue growth during the same period by -10.05%, the company has demonstrated a strong return over the last three months, with a 32.16% price total return.
Among the InvestingPro Tips, it's noteworthy that while analysts have revised their earnings downwards for the upcoming period, Ally Financial has managed to maintain dividend payments for 9 consecutive years, showcasing a commitment to shareholder returns. The dividend yield currently stands at 3.73%, with the company trading near its 52-week high at 89.8% of the peak price.
For investors seeking more in-depth analysis and additional insights, InvestingPro offers a comprehensive suite of tips. There are 9 more InvestingPro Tips available for Ally Financial, which can be accessed through a subscription. Currently, InvestingPro is offering a special New Year sale with discounts of up to 50%. To further sweeten the deal, use coupon code SFY24 for an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 for an additional 10% off a 1-year subscription. These tips and metrics can be instrumental in making informed investment decisions as Ally Financial navigates through its leadership changes and strategic shifts.
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