Ally Financial's (ALLY) Stock Up 4.2% On Q3 Earnings Beat
Zacks Investment Research | Oct 25, 2017 10:20PM ET
Shares of Ally Financial Inc. (NYSE:ALLY) increased 4.2% following the release of the company’s third-quarter 2017 results. Adjusted earnings of 65 cents per share surpassed the Zacks Consensus Estimate of 57 cents. Also, earnings increased 16.1% from the prior-year quarter.
Results benefited from an increase in total net revenues, partially offset by higher expenses. Capital ratios improved on a year-over-year basis in the quarter. However, higher provision for loan losses was a headwind.
Net income available to common shareholders (GAAP basis) was $282 million or 63 cents per share, increasing from $209 million or 43 cents registered in the prior-year quarter.
Revenues & Expenses Increase
Total net revenue for the quarter increased nearly 5.6% year over year to $1.46 billion, owing to a rise in net financing revenue. The Zacks Consensus Estimate for revenues was also $1.46 billion.
Total non-interest expenses increased 2.4% year over year to $753 million. The rise was due to an increase in compensation and benefits expense, and other operating expenses.
Credit Quality Deteriorates
Non-performing loans of $807 million were up 7.2% year over year. Moreover, provision for loan losses surged 21.7% year over year to $314 million.
Strong Balance Sheet, Capital Ratios Improve
Total finance receivables and loans amounted to $117.59 billion as of Sep 30, 2017 compared with $119.30 billion as of Jun 30, 2017. Deposits totalled $90.12 billion, increasing from $86.18 billion as of Jun 30, 2017.
As of Sep 30, 2017, total capital ratio came in at 13.2%, increasing from 12.8% registered in the prior-year quarter. Similarly, Tier I capital ratio was 11.5%, up from 11.1% as of Sep 30, 2016.
Share Repurchases
During the quarter, the company repurchased shares worth $190 million.
Our Take
Ally Financial’s high debt levels may restrain its ability to procure additional funds for working capital, acquisitions or other purposes. This may also negatively impact the company’s access to liquidity and increase borrowing costs in the unsecured market.
Further, mounting expenses might hurt bottom-line growth, going forward.
Ally Financial Inc. Price, Consensus and EPS Surprise
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.