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Ally Financial (ALLY)
NYSE:ALLY
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Ally Financial
(NYSE:ALLY)
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Rating:51Neutral
Price Target:
$36.00
▼(-0.39% Downside)
Action:ReiteratedDate:02/26/26
ALLY scores in the low-50s mainly due to weakening financial performance (sharp 2025 revenue decline, margin compression, and a major step-down in operating cash flow) and soft technical momentum (negative MACD and below the 50-day average). These are partially offset by reasonable valuation (P/E ~17 and ~2.9% yield) and a generally positive earnings outlook with guidance for improving NIM and continued operational progress, despite notable credit/macro and capital-ratio headwinds.
Positive Factors
Stable retail deposit funding and customer franchise
A large, growing retail deposit base provides durable, low-cost funding that reduces reliance on wholesale markets. Nearly 90% funding from deposits and 92% FDIC insured balances support asset growth, margin stability and resilience across rate cycles over the next 2–6 months.
Material improvement in earnings and returns
Substantial EPS and ROTCE improvement signals better capital efficiency and operating leverage. If management sustains margin and credit trends, higher returns support reinvestment, capital build or shareholder returns, strengthening the firm's long-term profitability trajectory.
Diversified fee streams and strong corporate finance unit
Growing insurance and other fee businesses plus a high‑ROE corporate finance franchise diversify revenue away from pure NIM dependence. These durable, higher‑margin streams can stabilize earnings through rate cycles and reduce sensitivity to auto lending volatility.
Negative Factors
Sharp 2025 revenue and operating cash flow decline
A large step-down in revenue and operating cash flow weakens internal funding for portfolio growth, reserves and buybacks. Persistent cash generation volatility raises questions about sustainability of capital actions and increases reliance on earnings recovery to rebuild flexibility over the medium term.
Capital buffer remains below target
CET1 below the stated 9% target constrains capital deployment and forces a cautious repurchase pace. Until capital ratios sustainably exceed the target, management must prioritize build‑up through earnings or balance sheet actions, limiting flexibility to expand risk assets or accelerate returns.
Residual-value and used-vehicle credit risks
Structural pressure on used-vehicle and EV residuals increases loss severity risk for leases and repossessions. Persistent weakness would raise charge-offs and reserve needs, compress returns and force tighter origination standards, weighing on the auto-finance franchise durability.
Ally Financial (ALLY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$11.17B
Dividend Yield2.58%
Average Volume (3M)3.72M
Price to Earnings (P/E)16.5
Beta (1Y)1.16
Revenue Growth-6.89%
EPS Growth-33.20%
CountryUS
Employees10,700
SectorFinancial
Sector Strength70
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)1.09
Shares Outstanding309,091,700
10 Day Avg. Volume4,002,651
30 Day Avg. Volume3,720,557
Financial Highlights & Ratios
PEG Ratio0.53
Price to Book (P/B)0.91
Price to Sales (P/S)1.16
P/FCF Ratio-21.76
Enterprise Value/Market Cap2.05
Enterprise Value/Revenue1.51
Enterprise Value/Gross Profit3.13
Enterprise Value/Ebitda9.36
Forecast
1Y Price Target
$53.93Price Target Upside49.23% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
EPS Forecast (FY)5.26
Revenue Forecast (FY)$9.02B
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 primarily makes money through net interest income and fees generated across its lending and banking activities. In auto finance—historically its largest business—it earns interest income on retail auto loans and leases originated largely through auto dealers, and it also provides floorplan financing and other credit products to automotive dealers, earning interest and related lending fees. Ally Bank funds a significant portion of these assets by gathering consumer deposits (e.g., savings, money market, and certificates of deposit); the spread between interest earned on loans/securities and interest paid on deposits and other borrowings is a major driver of profitability. The company also generates non-interest income from areas such as servicing- and account-related fees, gains or losses associated with loan sales/securitizations and other capital markets activity tied to funding, and insurance-related revenue through vehicle service and protection products and other coverage offerings that are often distributed in connection with auto lending. Credit performance (loan losses), funding costs (deposit pricing and wholesale funding conditions), used-vehicle values (affecting lease and recovery outcomes), and dealer/consumer demand for auto financing are significant factors influencing earnings.
Ally Financial Key Performance Indicators (KPIs)
Any
Assets by Segment
Highlights the distribution of assets across different business segments, indicating where the company is allocating resources and potential areas of strength or vulnerability in its portfolio.
Highlights the distribution of assets across different business segments, indicating where the company is allocating resources and potential areas of strength or vulnerability in its portfolio.
Data provided by:
The Fly
The FlyAlly Financial Earnings Call Summary
Earnings Call Date:Jan 21, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 17, 2026
Earnings Call Sentiment Positive
The call conveyed clear progress across key financial and operational metrics — notably strong EPS growth, materially higher ROTCE, retail auto NCOs below 2%, record dealer applications and origination volumes, capital improvement and an actionable path to higher NIM — while acknowledging manageable near-term headwinds including NIM seasonality, lease residual pressure on certain EV models, reserve conservatism driven by macro uncertainty, and the need to reach the 9% CET1 target. Overall the tone was constructive and forward-looking, with management highlighting disciplined execution, momentum in core franchises, and a cautious but growing return of capital to shareholders.Q4-2025 Updates
Positive Updates
Strong Earnings and EPS Growth
Full-year adjusted EPS of $3.81, up 62% year-over-year; Q4 adjusted EPS of $1.09 and GAAP EPS of $0.95, demonstrating material earnings expansion.
Improved Returns on Capital
Core ROTCE of 10.4% for 2025, up more than 300 basis points versus 2024; adjusted tangible book value per share of $40, up nearly 20% year-over-year.
Margin Progress and NIM Guidance
Net interest margin momentum: full-year NIM of 3.47% (3.51% in Q4 excluding OID); NIM increased more than 30 basis points in 2025 when adjusting for the sale of card. Company guidance expects full-year 2026 NIM in the ~3.63%–3.70% range and a path to 'upper threes' over time.
Credit Performance — Retail Auto Improvement
Full-year retail auto net charge-off rate of 1.97% (below 2% threshold); Q4 retail auto NCO rate declined 20 bps year-over-year to 2.14%; consolidated net charge-offs were 134 bps (up 16 bps QoQ driven by seasonality).
Revenue and Core Franchise Growth
Adjusted net revenue of $8.5 billion, up 3% year-over-year and up 6% excluding sale of card. Retail auto and corporate finance loans grew ~5% in 2025; ending balances across retail auto and corporate finance up ~$5 billion (>5% YoY).
Record Dealer & Origination Metrics
Record 15.5 million dealer applications; consumer originations of $43.7 billion, up 11% YoY, with a 9.7% origination yield and 43% of volume in highest credit tier. Q4 consumer originations of $10.8 billion, up 6% YoY.
Capital Actions and CET1 Progress
Fully phased-in CET1 improved to 8.3%, up ~120 basis points in 2025; authorized a $2 billion open-ended share repurchase program and executed initial repurchases of $24 million (low-and-slow approach).
Diversification & Fee Revenue Momentum
Insurance written premiums exceeded $1.5 billion for the year (record). Adjusted other revenue Q4 $550 million and full year other revenue up ~2% despite headwinds; growth drivers include insurance, smart auction, and auto pass-through programs.
Corporate Finance Strength
Corporate finance delivered a 28% ROE for the year (29% in Q4), portfolio grew by just over $3 billion year-over-year, and the business had its second consecutive year with no charge-offs.
Deposit and Customer Franchise Stability
Retail deposit balances of $144 billion; 3.5 million customers (17th consecutive year of customer growth); retail deposits represent nearly 90% of total funding and ~92% of balances are FDIC insured.
Negative Updates
Near-term NIM Volatility and Q1 Headwind
Q4 NIM (ex-OID) was 3.51%, down 4 basis points sequentially; management expects NIM to be slightly down in Q1 due to early beta and lease residual pressures before recovering through the year.
Lease Residual Losses and EV Model Pressure
Recognized $11 million of losses on lease terminations in Q4, concentrated in weaker models; residual values on some plug-in hybrid models pressured by elimination of EV tax credit, OEM recall, and increased OEM incentives.
Coverage Ratios and Reserve Stagnation
Consolidated coverage ratio declined 3 basis points to 2.54% in the quarter while retail auto coverage remained flat at 3.75% — management noted reserves have not meaningfully released and remain positioned against macro uncertainty.
Ongoing Macro & Used Vehicle Risks
Company highlighted macro risks (labor market, potential higher unemployment in 2026) and used vehicle values as key variables that could adversely affect credit and loss trajectories.
Revenue Headwinds from Strategic Exits
Sale and exit activity (credit card sale and exit from mortgage originations) produced headwinds: adjusted other revenue down 2% in Q4 and the company recorded a $27 million loss associated with moving nearly $400 million of legacy mortgage assets to held-for-sale.
Capital Still Below Preferred Threshold
Fully phased-in CET1 at 8.3% remains below the company’s 9% management target; management is building to 9% while also beginning modest repurchases (only $24 million bought to date against a $2 billion authorization).
Expense Actions and Workforce Reduction
Q4 adjusted non-interest expense excluded a $31 million restructuring charge related to a reduction in force; while controllable expenses were down 1% for the year, the charge signals near-term cost actions.
Quarterly Seasonality in Charge-offs
Consolidated net charge-offs rose 16 basis points quarter-over-quarter to 134 bps, and Q4 retail auto NCOs were up 26 bps QoQ (seasonal), highlighting quarterly volatility despite annual improvement.
Company Guidance
Ally guided full‑year 2026 NIM of about 3.63%–3.70% (starting from Q4 NIM of 3.51% and FY‑2025 NIM of 3.47%), assumes two Fed cuts and early beta dynamics that may push NIM slightly down in 1Q before migrating to the upper‑3% range by year‑end (management expects a through‑the‑cycle beta in the sixties); retail auto net charge‑offs are guided to roughly 1.8%–2.0% (consolidated NCOs 1.2%–1.4%), other revenue is expected to grow low‑single‑digits y/y (including about a $25M headwind from lost card fees), retail auto and corporate finance balances to grow mid‑single‑digits, average earning assets to increase (management cited roughly 2%–4% y/y), non‑interest expense to be up ~1% while preserving disciplined controllable costs, and an effective tax rate of about 20%–22% — all intended to drive progress toward an upper‑3s NIM, sub‑2% retail auto NCOs and ultimately mid‑teens sustainable returns.Ally Financial Financial Statement Overview
Summary
Financials show meaningful pressure: 2025 revenue fell sharply (-20.5% YoY), margins compressed (net margin ~7.0%), and operating cash flow dropped to ~$0.28B from ~$4.6B in 2023–2024. Balance sheet leverage remains meaningful (debt-to-equity ~1.4x) and ROE cooled to ~5.5%, though the company is still profitable and equity has grown since 2022.Income Statement
Profitability has weakened materially versus earlier years: net margin fell from 28.6% (2021) and 14.2% (2022) to 7.0% (2025), and operating margin compressed to 8.6% in 2025. Revenue is volatile and turned sharply negative in 2025 (-20.5% YoY) after modest growth in 2024, indicating a tougher operating environment. Offsetting this, the company remains profitable with positive operating earnings and a still-solid gross margin in 2025 (~52%).47
Neutral
Balance Sheet
Leverage is elevated but fairly stable for the period: debt-to-equity sits around 1.4x in 2025 (vs. ~1.0x in 2021 and ~1.5–1.7x in 2020–2023). Equity has grown since 2022, supporting the balance sheet, but returns on equity have cooled significantly (18.0% in 2021 down to 5.5% in 2025), reflecting reduced earnings power relative to capital.58
Neutral
Cash Flow
Cash generation deteriorated sharply in 2025: operating cash flow dropped to $0.28B from ~$4.6B in 2023–2024, and free cash flow fell similarly (down ~146% YoY). While free cash flow still covered net income in 2025 (FCF roughly matching net income), the large step-down in operating cash flow versus prior years raises questions about sustainability and working-capital/portfolio dynamics. Earlier years show inconsistency as well, with negative free cash flow in 2020–2021.34
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 12.15B | 16.37B | 15.97B | 12.10B | 10.69B |
| Gross Profit | 6.32B | 6.73B | 7.10B | 7.84B | 8.54B |
| EBITDA | 2.45B | 2.04B | 2.33B | 3.67B | 5.12B |
| Net Income | 852.00M | 668.00M | 957.00M | 1.71B | 3.06B |
Balance Sheet | |||||
| Total Assets | 196.00B | 191.84B | 196.33B | 191.83B | 182.11B |
| Cash, Cash Equivalents and Short-Term Investments | 10.03B | 29.30B | 26.66B | 31.21B | 38.45B |
| Total Debt | 21.77B | 19.23B | 20.98B | 20.30B | 17.20B |
| Total Liabilities | 180.50B | 177.93B | 182.63B | 178.97B | 165.06B |
| Stockholders Equity | 15.50B | 13.90B | 13.70B | 12.86B | 17.05B |
Cash Flow | |||||
| Free Cash Flow | -647.00M | 1.07B | 1.80B | 2.71B | -1.08B |
| Operating Cash Flow | 3.63B | 4.53B | 4.56B | 6.25B | 4.04B |
| Investing Cash Flow | -5.16B | 4.99B | -7.18B | -17.26B | -11.10B |
| Financing Cash Flow | 1.96B | -5.57B | 3.84B | 11.57B | -3.85B |
Ally Financial Technical Analysis
Negative
36.14
Price Trends
41.81
Negative
41.56
Negative
40.01
Negative
Market Momentum
-1.40
Positive
29.02
Positive
10.63
Positive
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 36.14 is below the 20-day moving average (MA) of 39.76, below the 50-day MA of 41.81, and below the 200-day MA of 40.01, indicating a bearish trend. The MACD of -1.40 indicates Positive momentum. The RSI at 29.02 is Positive, neither overbought nor oversold. The STOCH value of 10.63 is Positive, 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 1 New Risks
1.
The development and use of AI is rapidly evolving and our failure to appropriately evaluate, adopt, govern, or effectively integrate AI where beneficial could adversely affect us. Q4, 2025
Ally Financial Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $3.35B | 12.62 | 24.45% | ― | 21.10% | 76.12% | |
68 Neutral | $6.10B | 10.25 | 23.40% | 6.07% | 9.51% | 29.38% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $22.17B | 8.41 | 21.09% | 1.34% | -6.38% | 19.65% | |
64 Neutral | $4.81B | 11.59 | 26.63% | ― | 10.30% | 154.64% | |
62 Neutral | $3.91B | 6.01 | 31.14% | 1.88% | 0.59% | -1.11% | |
51 Neutral | $11.17B | 16.52 | 5.74% | 2.58% | -6.89% | -33.20% |
* Financial Sector Average
ALLY
Ally Financial
36.14
2.77
8.32%
CACC
Credit Acceptance
447.79
-39.06
-8.02%
SLM
SLM
19.74
-8.96
-31.22%
SYF
Synchrony Financial
63.78
11.30
21.53%
OMF
OneMain Holdings
52.06
7.02
15.58%
ENVA
Enova International
134.11
40.94
43.94%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.