Ally Financial (ALLY) AI Stock Analysis

• Market Cap: $11.26B
• Dividend Yield: 3.27%
• Average Volume (3M): 4.62M
• Price to Earnings (P/E): 26.9
• Beta (1Y): 1.29
• Revenue Growth: -2.99%
• EPS Growth: -43.64%
• Country: US
• Employees: 10,700
• Sector: Financial
• Sector Strength: 85
• Industry: Financial - Credit Services
• EPS (TTM): 0.58
• Shares Outstanding: 307,174,700
• 10 Day Avg. Volume: 3,099,783
• 30 Day Avg. Volume: 4,618,531
• PEG Ratio: -0.55
• Price to Book (P/B): 0.75
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 9.79
• Enterprise Value/Market Cap: 2.70
• Enterprise Value/Revenue: 0.84
• Enterprise Value/Gross Profit: 6.76
• Enterprise Value/Ebitda: 4.79
• 1Y Price Target: $39.86
• Price Target Upside: 11.40% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

Ally Financial's overall score reflects strong liquidity and debt management, with significant strengths highlighted in their earnings call regarding auto finance and corporate finance growth. Challenges in profitability, high P/E ratio, and insurance losses are concerns. The technical analysis shows positive short-term momentum but mixed long-term trends, while the valuation suggests limited upside. Overall, the company needs to focus on revitalizing revenue streams and improving profitability.

Positive Factors

Credit Quality

Credit losses and delinquencies remain elevated but showing signs of improvement.

Earnings Performance

Lower credit costs primarily drove 1Q25 EPS beat.

Market Dynamics

Used car prices increased with tariffs, providing some support to credit quality.

Negative Factors

Earnings Expectations

There is concern that the earnings may not meet expectations, as the net interest margin misses guidance.

Financial Performance

Ally sold $4.1 billion of securities for a $495m pre-tax loss, which does not seem to make sense or add value to Ally's economics.

Market Sentiment

The downturn in the stock is attributed to short-term investors selling their shares post-earnings, creating downside pressure even with a benign earnings print.

Ally Financial Business Overview & Revenue Model

Company Description

Ally Financial Inc., a digital financial-services company, provides various digital financial products and services to consumer, commercial, and corporate customers primarily in the United States and Canada. It operates through four segments: Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers' vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies; leveraged loans; and commercial real estate product to serve companies in the healthcare industry. The company also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan.

How the Company Makes Money

Ally Financial generates revenue through multiple channels. The company earns significant income from its automotive finance segment by providing loans and lease arrangements to consumers and dealerships. Ally also derives revenue from its online banking services, earning interest income on loans and fee income from deposit accounts. Additionally, the company offers insurance products, contributing to its earnings through premiums and related investment income. Mortgage services provide another revenue stream, with Ally originating and servicing mortgages for consumers. The company's diverse financial offerings and strong digital presence are key factors in its profitability, along with strategic partnerships with automotive manufacturers and dealers that enhance its market reach.

Ally Financial Financial Statement Overview

Summary

Ally Financial shows strong liquidity and debt management with stable equity and improved debt-to-equity ratio. However, challenges in profitability and revenue growth are evident as net profit margins and EBIT margins have declined, impacting overall financial health. Strong operational cash flow is a positive, but profitability metrics need improvement.

Income Statement

Ally Financial's income statement shows a decline in total revenue from $9.07 billion in 2023 to $8.9 billion in 2024. Gross profit margin is high at 159.9% in 2024 due to significant non-revenue income. However, the net profit margin decreased from 11.25% in 2023 to 7.51% in 2024, indicating reduced profitability. EBIT margin also fell from 25.69% in 2023 to 7.52% in 2024, showing declining operational efficiency.

Balance Sheet

The balance sheet indicates a stable equity position with stockholders' equity slightly increasing to $13.9 billion in 2024. The debt-to-equity ratio improved from 1.47 in 2023 to 1.38 in 2024, suggesting better debt management. Return on equity decreased from 7.41% in 2023 to 4.80% in 2024, reflecting reduced profitability. The equity ratio is stable at 7.25%, showing a consistent capital structure.

Cash Flow

Ally Financial's cash flow statement shows strong operational cash flow of $4.53 billion in 2024, albeit slightly down from $4.66 billion in 2023. Free cash flow to net income ratio improved significantly, indicating better cash conversion. However, free cash flow growth faced challenges due to reduced net income and capital expenditures.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
10.15B	8.90B	9.07B	7.94B	8.67B	6.20B
	Gross Profit
4.50B	8.90B	9.07B	7.94B	8.67B	6.20B
	EBIT
635.00M	669.00M	2.33B	1.32B	3.23B	563.00M
	EBITDA
1.09B	0.00	2.38B	3.56B	4.94B	2.55B
	Net Income Common Stockholders
286.00M	668.00M	1.02B	1.71B	3.06B	1.08B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
0.00	32.70B	31.36B	31.21B	38.45B	45.31B
	Total Assets
193.33B	191.84B	196.39B	191.83B	182.35B	182.16B
	Total Debt
19.80B	19.23B	20.23B	20.16B	17.03B	24.14B
	Net Debt
19.80B	8.94B	13.29B	14.59B	11.97B	8.52B
	Total Liabilities
179.10B	177.93B	182.63B	178.97B	165.30B	167.46B
	Stockholders Equity
14.23B	13.90B	13.77B	12.86B	17.05B	14.70B
Cash Flow		Free Cash Flow
1.09B	1.07B	1.90B	2.71B	-1.08B	-581.00M
	Operating Cash Flow
3.66B	4.53B	4.66B	6.25B	4.04B	3.74B
	Investing Cash Flow
361.00M	4.99B	-7.29B	-17.26B	-11.10B	8.43B
	Financing Cash Flow
-1.93B	-5.57B	3.84B	11.57B	-3.85B	25.00M

Ally Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 35.78
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALLY, the sentiment is Positive. The current price of 35.78 is above the 20-day moving average (MA) of 33.14, above the 50-day MA of 33.98, and below the 200-day MA of 36.32, indicating a neutral trend. The MACD of 0.49 indicates Negative momentum. The RSI at 60.16 is Neutral, neither overbought nor oversold. The STOCH value of 82.32 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for ALLY.

Ally Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CACC	72 Outperform	$5.78B	21.18	17.24%	―	13.77%	20.95%
SYF	71 Outperform	$23.36B	8.42	18.60%	1.63%	1.22%	4.96%
ALLY	71 Outperform	$11.26B	26.93	3.84%	3.27%	-2.99%	-43.64%
OMF	68 Neutral	$6.23B	11.09	17.46%	7.94%	9.07%	―
SOFI	68 Neutral	$15.80B	33.34	7.51%	―	21.24%	―
SLM	66 Neutral	$6.99B	12.00	27.60%	1.44%	-0.70%	-12.72%
Sector *	64 Neutral	$12.75B	9.93	7.86%	17015.07%	12.19%	-5.92%

Ally Financial Corporate Events

Ally Financial’s Strategic Executive Transition Announcement

Jason E. Schugel’s transition from Chief Risk Officer to Senior Operating Adviser at Ally Financial Inc. includes a comprehensive agreement ensuring his financial security and benefits until his departure by March 2025. The agreement outlines his compensation package, including a significant incentive plan, vested stock units, and a lump-sum payment, along with provisions for career transition support. This move reflects Ally’s strategic management adjustments and Schugel’s continued influence within the company, appealing to those tracking executive movements and corporate governance in the financial sector.