Ally Financial Inc. (NYSE:ALLY) stock is jumping 7% today after the company reported significantly higher-than-expected fourth-quarter earnings per share. Moreover, its loan losses came in well below analysts' average outlook. Ally provides loans that finance auto purchases.

A Look at Ally's Q4 Results

Ally Financial (NYSE:ALLY) generated Q4 EPS, excluding certain items, of 78 cents, well above analysts' mean estimate of 57 cents. Its loan loss provisions of $557 million came in well below the average outlook of $657 million. In the last several months, the net chargeoffs of its consumer auto loans have risen, increasing worries on the Street about the company's credit quality. Consequently, the significantly lower-than-expected loan loss provisions are likely a key factor behind the stock's rally today.

On a negative note, it reported sales of $2.03 billion, slightly below the mean outlook of $2.07 billion.

“As we enter 2025, I am encouraged by strong momentum across our business,” CEO Michael Rhodes said in a statement. “This optimism is driven by an improved outlook on credit, a balance sheet well positioned for margin expansion, and continued disciplined management of expenses and capital,” the CEO added.

The Recent Price Action of ALLY Stock

In the last month, the shares have climbed 13%, while they are up 17% in the last three months.

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Disclosure: None. This article is originally published at Insider Monkey.