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Just For You Ally Financial Pops on Q4 Earnings Beat and $2 Billion BuybackWritten by Jordan Chussler. Date Posted: 1/23/2026. 
In Brief - The financials sector has been the S&P 500’s worst performer over the past month, posting a loss of 2.99%.
- Shares of financial services firm Ally jumped 7% on Wednesday after the company reported record EPS growth.
- The company also announced that it has authorized a $2 billion stock buyback program.
Over the past month, the financial services sector has been the weakest performer in the S&P 500, down 2.99%. Over the past six months, its modest 1.26% gain ranks second-worst. But as Q4 earnings season ramps up, bank stocks are already demonstrating the sector's long-term value, with earnings beats and confident forward guidance helping to rebuild investor confidence. A freight train pulling 50 railcars can be worth $2 million in economic value. That's the idea behind a new trading concept called the Money Train Method. Imagine bumping your win rate from 50 percent up to 60, 75, or even 80 percent while increasing each trade's profit potential to an average gain of 20 to 30 percent, with triple-digit runners possible. The strategy also builds in downside protection with a reward-to-risk ratio of 1.2 to 1. See how the Money Train Method works. That dynamic was on display when online bank Ally Financial (NYSE: ALLY) reported Q4 and full-year results on Wednesday, Jan. 21, prompting the market to push shares nearly 7% higher. Ally Reports Record Q4 Earnings Growth Ally posted Q4 earnings of $1.09 per share, beating the consensus estimate of $1.02, and reported quarterly revenue of $2.17 billion—a 4.8% year-over-year (YOY) increase and above analyst expectations of $2.15 billion. Ally's 2025 full-year results included adjusted total net revenue of $8.5 billion and core pre-tax income of $1.6 billion. On the company's earnings call, CEO Michael Rhodes said the firm generated $1.5 billion in written insurance premiums—a record for Ally—alongside YOY EPS growth of 62%, also a record. The EPS growth was welcome news for shareholders after annualized earnings contractions of 38.81%, 44.93% and 35.02% in 2022, 2023 and 2024, respectively. Part of 2025's strength came from record consumer auto applications, with 3.8 million in Q4 equating to $10.8 billion in loan originations. On an annual basis, originations totaled about $43.7 billion, up 11% YOY. Adding to the positive news, the firm authorized a $2 billion share buyback program and issued 2026 guidance that includes 5% revenue growth. Rhodes noted Ally "ended the year with $144 billion in retail deposit balances, reinforcing our position as the largest all-digital direct bank in the United States," and that the bank "now serve[s] 3.5 million customers as 2025 marked our 17th consecutive year of customer growth." With a trailing EPS of $1.66 and a trailing 12-month price-to-earnings (P/E) ratio of 25.52, Ally Financial's earnings are expected to grow an eye-catching 53.22% next year, from $3.57 to $5.47 per share. Ally's Dividend Pays Investors to Patiently Wait for the Upside The average 12-month price target of $49.44 for ALLY implies nearly 17% potential upside. Coupled with a forward P/E of just 11.88, the stock increasingly looks like a value opportunity. As with many financial institutions, Ally pays a dividend to patient shareholders. Currently, that dividend pays $1.20 per share annually, representing a 2.83% yield based on today's price. While Ally's dividend payout ratio of more than 72% may raise questions, the company has a five-year annualized dividend growth rate of 12.03%, suggesting the payment has been reliable. The next quarterly payment of $0.30 per share is scheduled for Tuesday, Feb. 17, to investors of record before the ex-dividend date of Monday, Feb. 2. What Wall Street Thinks About Ally Financial? So far in January, Ally Financial has been upgraded by Evercore, Wells Fargo and Bank of America to Outperform, Overweight and Buy, respectively. The firms pointed to improving credit trends and growing confidence in Ally's net interest margin—the difference between interest earned on loans and investments and interest paid on deposits and debt. Of the 18 analysts covering ALLY, 13 assign the stock a Buy rating, five assign it a Hold, and none assign it a Sell. Overall, it receives a Moderate Buy rating. According to TradeSmith, the stock's financial health is in the Green Zone, where it has been for more than three months. Meanwhile, institutional ownership remains above average at nearly 89%, with inflows of $2.46 billion easily outpacing outflows of $1.62 billion over the past 12 months. Current short interest stands at 3.5%, or just over 308,000 shares out of the 10.7 million shares outstanding. Notably, Ally Financial scores higher than 99% of the companies evaluated by MarketBeat and ranks 25th out of 907 stocks in the finance sector.
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