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Ally Financial (ALLY)
NYSE:ALLY
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Ally Financial
(NYSE:ALLY)
62Neutral
Positive Factors
Auto Prices
A potential strengthening in used vehicle prices from extended tariffs could serve as a credit tailwind for ALLY.
Credit Trends
Credit trends remain positive, supported by favorable vintage dynamics.
Negative Factors
Capital Ratios
Selling investment securities may harm Ally's capital ratios, as evidenced by a recent sale resulting in a significant loss.
Competition
Heightened competition among the top-10 banks for prime and superprime auto loans is impacting asset yields and loan origination volumes for Ally.
Financial Targets
Ally is facing challenges in reaching its mid-teens ROE and $6 EPS targets due to compressing asset yields and insufficient auto loan originations.
Ally Financial (ALLY) vs. S&P 500 (SPY)
Market Cap
$9.77B
Dividend Yield3.79%
Average Volume (3M)5.37M
Price to Earnings (P/E)17.7
Beta (1Y)1.36
Revenue Growth-2.90%
EPS Growth-43.64%
CountryUS
Employees10,700
SectorFinancial
Sector Strength78
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)0.78
Shares Outstanding307,135,220
10 Day Avg. Volume6,274,880
30 Day Avg. Volume5,367,278
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.57
Price to Cash Flow (P/CF)4.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$41.07Price Target Upside29.85% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
Ally Financial Business Overview & Revenue Model
Company DescriptionAlly 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 MoneyAlly Financial makes money through several key revenue streams, primarily driven by its auto finance operations, which include retail auto loans and leases, and dealer financial services. The company also generates revenue from its direct banking operations, offering high-yield savings accounts, certificates of deposit, and other banking products that attract retail and commercial deposits. Additionally, Ally earns income from mortgage services, insurance products, and investment services, which include brokerage and wealth management solutions. Significant partnerships with automotive dealers and manufacturers enhance its auto finance and insurance segments, contributing to its earnings. The company leverages a digital-first strategy to reduce operational costs and attract a tech-savvy customer base, further supporting its profitability.
Ally Financial Financial Statement Overview
Summary
Ally Financial showcases robust revenue growth and stable gross profit margins. However, challenges in maintaining profitability are evident due to declining net profit and EBIT margins. The balance sheet indicates improved but high leverage, posing risks. Cash flow shows growth but highlights concerns over cash conversion efficiency.Income Statement
Ally Financial demonstrated strong revenue growth over the years, with a significant increase from 2022 to 2023. The gross profit margin remains stable at 100%, but the net profit margin has decreased from 16.2% in 2022 to 4.7% in 2023, indicating higher costs or expenses. EBIT and EBITDA margins have also declined, reflecting a decrease in operating efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio has improved slightly, indicating a more balanced capital structure. However, it remains relatively high, suggesting potential leverage risks. The equity ratio is stable, showing a consistent level of shareholder investment in the company's total assets. Return on equity has decreased, reflecting lower profitability relative to equity.70
Positive
Cash Flow
Free cash flow has shown significant growth, but the operating cash flow to net income ratio has decreased, indicating reduced cash generation efficiency from profits. The free cash flow to net income ratio is healthy, suggesting good cash conversion from earnings.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 8.90B | 9.07B | 7.94B | 8.67B | 6.20B | Gross Profit |
| 14.22B | 9.07B | 7.94B | 8.67B | 6.20B | EBIT |
| 669.00M | 2.33B | 1.32B | 3.23B | 563.00M | EBITDA |
| 0.00 | 2.38B | 3.56B | 4.94B | 2.55B | Net Income Common Stockholders |
| 668.00M | 1.02B | 1.71B | 3.06B | 1.08B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 32.70B | 31.36B | 31.21B | 38.45B | 45.31B | Total Assets |
| 191.84B | 196.39B | 191.83B | 182.35B | 182.16B | Total Debt |
| 19.12B | 20.23B | 20.16B | 17.03B | 24.14B | Net Debt |
| 8.83B | 13.29B | 14.59B | 11.97B | 8.52B | Total Liabilities |
| 177.93B | 182.63B | 178.97B | 165.30B | 167.46B | Stockholders Equity |
| 13.90B | 13.77B | 12.86B | 17.05B | 14.70B |
| Cash Flow | Free Cash Flow | |||
| 4.53B | 1.90B | 2.71B | -1.08B | -581.00M | Operating Cash Flow |
| 4.53B | 4.66B | 6.25B | 4.04B | 3.74B | Investing Cash Flow |
| 4.99B | -7.29B | -17.26B | -11.10B | 8.43B | Financing Cash Flow |
| -5.57B | 3.84B | 11.57B | -3.85B | 25.00M |
Ally Financial Technical Analysis
Negative
31.63
Price Trends
35.49
Negative
36.34
Negative
37.03
Negative
Market Momentum
-1.13
Positive
38.87
Neutral
50.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALLY, the sentiment is Negative. The current price of 31.63 is below the 20-day moving average (MA) of 34.32, below the 50-day MA of 35.49, and below the 200-day MA of 37.03, indicating a bearish trend. The MACD of -1.13 indicates Positive momentum. The RSI at 38.87 is Neutral, neither overbought nor oversold. The STOCH value of 50.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALLY.
Ally Financial Risk Analysis
Ally Financial disclosed 42 risk factors in its most recent earnings report. Ally Financial reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Ally Financial Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $40.16B | 9.01 | 24.68% | 1.75% | 15.46% | 45.83% | |
73 Outperform | $5.68B | 23.78 | 14.15% | ― | 13.70% | -9.00% | |
70 Outperform | $18.61B | 5.60 | 22.96% | 2.09% | 19.73% | 65.57% | |
69 Neutral | $62.33B | 14.05 | 7.86% | 1.47% | 9.06% | -3.02% | |
67 Neutral | $22.82B | 10.85 | 11.71% | 4.28% | 6.12% | 0.68% | |
63 Neutral | $11.98B | 9.29 | 8.14% | 79.54% | 12.87% | -5.13% | |
62 Neutral | $9.77B | 17.68 | 3.84% | 3.79% | -2.90% | -43.64% |
* Financial Sector Average
Performance Comparison
ALLY
Ally Financial
31.63
-6.91
-17.93%
COF
Capital One Financial
162.77
17.70
12.20%
CACC
Credit Acceptance
472.19
-46.99
-9.05%
DFS
Discover Financial Services
159.63
35.26
28.35%
FITB
Fifth Third Bancorp
34.15
-1.08
-3.07%
SYF
Synchrony Financial
47.87
6.53
15.80%
Ally Financial Earnings Call Summary
Earnings Call Date: Apr 17, 2025 | % Change Since: -1.71% | Next Earnings Date: Jul 16, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong growth in key areas such as auto finance and corporate finance, and emphasized the strength of the company's brand and digital bank. However, challenges such as the impact of the credit card business sale, elevated delinquencies in retail auto, and significant weather-related losses in insurance presented noteworthy concerns.Highlights
Record Application Volume in Auto Finance
Consumer originations in the auto finance business reached $10.2 billion, driven by 3.8 billion applications, marking the highest quarterly application volume ever.
Net Promoter Scores and Brand Strength
Ally's Net Promoter Scores are well ahead of industry averages, and positive brand social sentiment is nearly ninety percent, almost double compared to banking peers.
Strong Performance in Corporate Finance
Corporate finance delivered a strong quarter with pre-tax income of $76 million and a 25% ROE, ending the quarter with zero net charge-offs.
Growth in Insurance Premiums
Insurance written premiums increased by 9% year over year, supported by growth in P&C exposure and new relationships.
Digital Bank Customer Growth
The digital bank now serves 3.3 million customers, with balances reaching $146 billion at the end of the quarter, up nearly $3 billion quarter over quarter.
Lowlights
Impact of Credit Card Business Sale
The sale of the credit card business resulted in a $495 million pre-tax loss related to securities repositioning and impacted the net interest margin.
Weather-Related Losses in Insurance
Net weather losses totaled $58 million, the highest first quarter of weather-related losses in Ally's history, primarily due to a three-day severe weather event.
Elevated Delinquencies in Retail Auto
Retail auto net charge-offs were 212 basis points, reflecting elevated delinquency levels, although there was a year-over-year improvement.
Lease Remarketing Losses
The company recognized $19 million in losses on lease remarketing due to mixed headwinds, although performance improved throughout the quarter.
Company Guidance
During the Ally Financial First Quarter 2025 Earnings Conference Call, leadership provided guidance on several key financial metrics. The company reported an adjusted earnings per share of $0.58 and a core pre-tax income of $247 million. Additionally, adjusted net revenue was stated at $2.1 billion, with a net interest margin of 3.35%, which increased by two basis points compared to the previous quarter. The call also highlighted that consumer originations in the auto finance business reached $10.2 billion, with originated yields of 9.8%. The deposit franchise was noted to serve 3.3 million customers, with total balances of $146 billion, up nearly $3 billion from the previous quarter. Lastly, corporate finance pre-tax income was $76 million, reflecting a 25% return on equity, while written premiums in the insurance segment increased by 9% to $385 million year over year.Ally Financial Corporate Events
Executive/Board ChangesBusiness Operations and Strategy
Ally Financial’s Strategic Executive Transition Announcement
Neutral
Nov 26, 2024
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.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.