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

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

The all-digital bank and auto loan provider posted adjusted earnings per share of 78 cents for the fourth quarter, with revenue down 2.4% year-over-year to $2.03 billion. Both figures exceeded analysts’ expectations compiled 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 electric vehicle leases, “and made changes to corporate expense allocations and reporting segments.”

Ally also said credit and payment company CardWorks, along with its wholly-owned subsidiary Merrick Bank, would acquire its credit card 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 active cardholders as of Dec. 31.

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

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

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