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Tuesday's Bonus Content Ally Financial Pops on Q4 Earnings Beat and $2 Billion BuybackAuthor: Jordan Chussler. Published: 1/23/2026. 
Article Highlights - 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 worst 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 begins in earnest, bank stocks are already demonstrating the sector's long-term value as earnings beats and strong forward guidance aim to reinvigorate investor confidence. A little-known government task force just wrapped up a 20-year project, and its findings could unlock access to a massive U.S. national asset. Under existing law, everyday Americans may now have a legal path to participate in what some are calling a once-in-a-generation opportunity.
Details are still flying under the radar, but that may not last. See the full briefing and how it works Such was the case when online bank Ally Financial (NYSE: ALLY) reported Q4 and full-year financials on Wednesday, Jan. 21, with the market reacting positively and pushing shares nearly 7% higher. Ally Reports Record Q4 Earnings Growth When Ally posted Q4 earnings, it announced earnings per share (EPS) of $1.09, beating the consensus estimate of $1.02, and quarterly revenue of $2.17 billion—a 4.8% year-over-year (YOY) increase and ahead of analyst expectations of $2.15 billion. Ally's 2025 full-year results showed adjusted total net revenue of $8.5 billion and core pre-tax income of $1.6 billion. In the company's earnings call, CEO Michael Rhodes noted the company 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 for shareholders after annualized earnings contractions of -38.81%, -44.93%, and -35.02% in 2022, 2023, and 2024, respectively. Part of 2025's strong EPS growth was attributed to record consumer auto applications: Ally processed 3.8 million in Q4, equating to $10.8 billion in loan originations. Annually, that figure was about $43.7 billion, up 11% YOY. The firm also authorized a $2 billion share buyback program and issued 2026 guidance that includes 5% revenue growth. Rhodes said 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," adding 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. However, with a forward P/E of just 11.88, the stock increasingly looks like a value opportunity. Like most financial institutions, Ally also pays a dividend to patient shareholders. Currently, that dividend totals $1.20 annually, representing about 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 is well-supported. The next quarterly payment of $0.30 per share is scheduled for Tuesday, Feb. 17. The ex-dividend date is Monday, Feb. 2; investors who own the stock before that date will be eligible to receive the dividend. 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 investment banks cited improving credit trends and confidence in Ally's expanding net interest margin—the gap between interest earned on assets 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 falls 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 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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