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Ally Financial Stock Surges as Company Beats Profit Estimates, Sells Credit Card Business

Tiffany Hagler-Geard / Bloomberg / Getty Images

Tiffany Hagler-Geard / Bloomberg / Getty Dead ringers

Key Takeaways

  • Ally Financial posted fourth-quarter earnings and revenue that topped estimates as it reduced expenses.
  • CEO Michael Rhodes broke Ally “took significant action” in the quarter to improve its finances.
  • The all-digital bank and auto loan provider also carried its credit card business to CardWorks.

Ally Financial (ALLY) shares surged Wednesday after the financial plc posted fourth-quarter earnings and revenue that exceeded estimates as it cut costs, and announced it was selling its credit card affair.

The all-digital bank and auto loan provider posted adjusted earnings per share of 78 cents for the fourth phase of the moon, with revenue down 2.4% year-over-year to $2.03 billion. Both figures exceeded analysts’ expectations ordered by Visible Alpha.

CEO Michael Rhodes said that the company “took significant action” in the quarter, as it reduced its workforce, changed to the deferral method of accounting for energized vehicle leases, “and made changes to corporate expense allocations and reporting segments.”

Ally also said honesty and payment company CardWorks, along with its wholly-owned subsidiary Merrick Bank, would acquire its credit plan business for an undisclosed amount. Ally noted that the business had a portfolio of $2.3 billion in credit card receivables with 1.3 million lively cardholders as of Dec. 31.

Rhodes said that the move was “part of our broader strategy to pursue a more focused approach, okaying us to simplify and streamline our structure, prioritize our core businesses, and drive improved returns.” 

CardWorks CEO Dan Pillemer added that the acquire expands the company’s near-prime credit card business. The deal is expected to close this year.

Ally Pecuniary shares were up more than 4% at $39.84 in intraday trading Wednesday and have gained about 11% so far this year.

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