Ally's stock rallies after earnings beat and deal with Synchrony

By Steve Gelsi

Ally says its point-of-sale transaction with Synchrony will boost its 2024 earnings

Ally Financial Inc.'s stock ended trading Friday with a 10.7% gain - its best one-day rise in nearly a year - after the bank's earnings beat Wall Street estimates and the bank agreed to sell its point-of-sale financing business to Synchrony Financial.

Ally Financial (ALLY) said its fourth-quarter net income fell to $49 million, or 16 cents a share, from $251 million, or 83 cents a share, in the year-ago quarter.

Fourth-quarter adjusted profit dropped to 45 cents a share from $1.08 a share and beat the FactSet consensus estimate of 44 cents a share.

Fourth-quarter revenue dipped to $2.07 billion from $2.2 billion in the year-ago quarter, but came in ahead of the analyst estimate of just under $2 billion.

Ally Financial's stock rose $3.44 to close at $35.57, its largest percentage increase since it rose 20% on Jan. 20, 2023, according to Dow Jones Market Data.

The stock is currently up 13.2% in the past year, compared to a 21.8% rise by the S&P 500 SPX, which set a new record-high on Friday.

Ally Financial said Synchrony Financial (SYF) agreed to buy Ally's point of sale financing business, which includes $2.2 billion of loan receivables, for an undisclosed price.

The transaction includes nearly 2,500 merchant locations and 450,000-plus active borrowers in home improvement services and healthcare.

Ally Financial Chief Executive Jeff (JB) Browns said the deal "allows us to continue to be disciplined in allocating capital to optimize risk-adjusted returns as we manage through a dynamic operating environment."

Ally said the transaction will boost its CET1 ratio by about 0.15% upon closing and "be modestly accretive" to tangible book value and earnings per share in 2024.

-Steve Gelsi

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01-19-24 1625ET

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