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Ally Financial's (ALLY) Stock Up 1.8% on Q4 Earnings Beat
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Shares of Ally Financial Inc. (ALLY - Free Report) increased 1.8% following the release of its fourth-quarter and full-year 2017 results. Adjusted earnings of 70 cents per share for the quarter surpassed the Zacks Consensus Estimate of 59 cents. Also, the bottom line compared favorably with the prior-year quarter figure of 54 cents.
Results benefited from an increase in total net revenues, partially offset by higher expenses. Also, capital ratios improved on a year-over-year basis in the quarter. However, higher provision for loan losses was a headwind.
After taking into consideration non-recurring items, including the 27 cents per share charge related to the Tax Act, net income available to common shareholders (GAAP basis) for the quarter was $181 million or 41 cents per share, decreasing from $248 million or 52 cents registered in the prior-year quarter.
For 2017, adjusted earnings per share came in at $2.39, surpassing the Zacks Consensus Estimate of $2.30 per share. Also, the figure improved 10.6% year over year. Net income available to common shareholders (GAAP basis) was $929 million or $2.04 per share compared with $1.04 billion or $2.15 per share in 2016.
Revenues Improve, Expenses Rise
Total net revenues for the quarter increased nearly 7.7% year over year to $1.47 billion, owing to a rise in net financing revenue. Also, the figure surpassed the Zacks Consensus Estimate of $1.44 billion.
For 2017, net revenues were $5.77 billion, increasing 6% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $5.75 billion.
Total non-interest expenses for the quarter increased 6.7% year over year to $769 million. The rise was due to an increase in compensation and benefits expense, and other operating expenses.
Credit Quality: Mixed Bag
Non-performing loans of $792 million at the end of the quarter were down 3.3% year over year. However, provision for loan losses increased 10.1% year over year to $294 million.
Strong Balance Sheet, Capital Ratios Improve
Total finance receivables and loans amounted to $121.62 billion as of Dec 31, 2017 compared with $117.59 billion as of Sep 30, 2017. Deposits totalled $93.26 billion, increasing from $90.12 billion as of Sep 30, 2017.
As of Dec 31, 2017, total capital ratio came in at 12.9%, increasing from 12.6% registered in the prior-year quarter. Similarly, Tier I capital ratio was 11.2%, up from 10.9% as of Dec 31, 2016.
Share Repurchases
During the year, the company repurchased shares worth $753 million.
Our Take
Ally Financial’s initiatives toward diversifying revenue base are likely to support profitability in the quarters ahead. Also, the company's steady capital deployment plan reflects a strong balance sheet position. Moreover, given the gradual change in the rate environment, its margin is expected to further improve, thereby supporting top-line growth. However, high debt levels and mounting expenses remain major concerns.
Ally Financial Inc. Price, Consensus and EPS Surprise
Among others, Capital One Financial Corporation (COF - Free Report) reported fourth-quarter 2017 adjusted earnings of $1.62 per share, lagging the Zacks Consensus Estimate of $1.83. However, it compared favorably with the year-ago quarter’s earnings of $1.58. Results benefited from an increase in revenues and easing margin pressure. Also, the quarter witnessed a rise in loan and deposit balances. However, increase in provisions and expenses were the undermining factors.
Sallie Mae’s (SLM - Free Report) fourth-quarter 2017 adjusted core earnings of 19 cents per share was in line with the Zacks Consensus Estimate. The reported figure increased 22% from the prior-year quarter. Earnings growth was supported by an increase in net interest income. The private education loan portfolio and deposits grew considerably. However, these positives were offset by lower non-interest income, elevated expenses and poor credit quality.
Navient Corporation’s (NAVI - Free Report) fourth-quarter 2017 adjusted core earnings per share of 43 cents surpassed the Zacks Consensus Estimate by a penny. The reported figure matches the year-ago quarter tally. Results reflected higher non-interest income. However, on the downside, the company registered lower net interest income and higher expenses.
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Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Ally Financial's (ALLY) Stock Up 1.8% on Q4 Earnings Beat
Shares of Ally Financial Inc. (ALLY - Free Report) increased 1.8% following the release of its fourth-quarter and full-year 2017 results. Adjusted earnings of 70 cents per share for the quarter surpassed the Zacks Consensus Estimate of 59 cents. Also, the bottom line compared favorably with the prior-year quarter figure of 54 cents.
Results benefited from an increase in total net revenues, partially offset by higher expenses. Also, capital ratios improved on a year-over-year basis in the quarter. However, higher provision for loan losses was a headwind.
After taking into consideration non-recurring items, including the 27 cents per share charge related to the Tax Act, net income available to common shareholders (GAAP basis) for the quarter was $181 million or 41 cents per share, decreasing from $248 million or 52 cents registered in the prior-year quarter.
For 2017, adjusted earnings per share came in at $2.39, surpassing the Zacks Consensus Estimate of $2.30 per share. Also, the figure improved 10.6% year over year. Net income available to common shareholders (GAAP basis) was $929 million or $2.04 per share compared with $1.04 billion or $2.15 per share in 2016.
Revenues Improve, Expenses Rise
Total net revenues for the quarter increased nearly 7.7% year over year to $1.47 billion, owing to a rise in net financing revenue. Also, the figure surpassed the Zacks Consensus Estimate of $1.44 billion.
For 2017, net revenues were $5.77 billion, increasing 6% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $5.75 billion.
Total non-interest expenses for the quarter increased 6.7% year over year to $769 million. The rise was due to an increase in compensation and benefits expense, and other operating expenses.
Credit Quality: Mixed Bag
Non-performing loans of $792 million at the end of the quarter were down 3.3% year over year. However, provision for loan losses increased 10.1% year over year to $294 million.
Strong Balance Sheet, Capital Ratios Improve
Total finance receivables and loans amounted to $121.62 billion as of Dec 31, 2017 compared with $117.59 billion as of Sep 30, 2017. Deposits totalled $93.26 billion, increasing from $90.12 billion as of Sep 30, 2017.
As of Dec 31, 2017, total capital ratio came in at 12.9%, increasing from 12.6% registered in the prior-year quarter. Similarly, Tier I capital ratio was 11.2%, up from 10.9% as of Dec 31, 2016.
Share Repurchases
During the year, the company repurchased shares worth $753 million.
Our Take
Ally Financial’s initiatives toward diversifying revenue base are likely to support profitability in the quarters ahead. Also, the company's steady capital deployment plan reflects a strong balance sheet position. Moreover, given the gradual change in the rate environment, its margin is expected to further improve, thereby supporting top-line growth. However, high debt levels and mounting expenses remain major concerns.
Ally Financial Inc. Price, Consensus and EPS Surprise
Ally Financial Inc. Price, Consensus and EPS Surprise | Ally Financial Inc. Quote
Currently, Ally Financial sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
Performance of Other Finance Companies
Among others, Capital One Financial Corporation (COF - Free Report) reported fourth-quarter 2017 adjusted earnings of $1.62 per share, lagging the Zacks Consensus Estimate of $1.83. However, it compared favorably with the year-ago quarter’s earnings of $1.58. Results benefited from an increase in revenues and easing margin pressure. Also, the quarter witnessed a rise in loan and deposit balances. However, increase in provisions and expenses were the undermining factors.
Sallie Mae’s (SLM - Free Report) fourth-quarter 2017 adjusted core earnings of 19 cents per share was in line with the Zacks Consensus Estimate. The reported figure increased 22% from the prior-year quarter. Earnings growth was supported by an increase in net interest income. The private education loan portfolio and deposits grew considerably. However, these positives were offset by lower non-interest income, elevated expenses and poor credit quality.
Navient Corporation’s (NAVI - Free Report) fourth-quarter 2017 adjusted core earnings per share of 43 cents surpassed the Zacks Consensus Estimate by a penny. The reported figure matches the year-ago quarter tally. Results reflected higher non-interest income. However, on the downside, the company registered lower net interest income and higher expenses.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>