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Ally Financial (ALLY)
NYSE:ALLY
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Ally Financial
(NYSE:ALLY)60Neutral
Positive Factors
Earnings
ALLY reported adjusted EPS that exceeded expectations, driven by lower provision.
Financial Performance
Strong positive trends in auto credit leads to a revision up of the ’25 outlook to ~215bps.
Negative Factors
Interest Rates
Higher long-term rates could weigh on origination volumes.
Ally Financial (ALLY) vs. S&P 500 (SPY)
Market Cap
$10.75B
Dividend Yield3.46%
Average Volume (3M)3.44M
Price to Earnings (P/E)19.5
Beta (1Y)1.59
Revenue Growth3.41%
EPS Growth-12.41%
CountryUS
Employees10,700
SectorFinancial
Sector Strength93
IndustryCredit Finance
Share Statistics
EPS (TTM)2.60
Shares Outstanding307,113,100
10 Day Avg. Volume3,980,743
30 Day Avg. Volume3,443,269
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.56
Price to Cash Flow (P/CF)4.30
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
$45.14Price Target Upside30.27% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering16
Ally Financial Business Overview & Revenue Model
Company DescriptionAlly Financial Inc. is a leading digital financial services company headquartered in Detroit, Michigan. It operates primarily in the financial services and online banking sectors, offering a range of products including auto financing, online banking, corporate financing, vehicle insurance, mortgage services, and investment products. Ally is known for its customer-centric approach, providing innovative financial solutions for consumers, businesses, automotive dealers, and corporate clients.
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 shows strong revenue growth and stable gross profit margins. However, declining net profit and EBIT margins suggest challenges in profitability. The balance sheet indicates improved but high leverage, posing potential risks. Cash flow analysis shows growth but highlights concerns over cash conversion efficiency. Overall, the company faces challenges in maintaining profitability and managing leverage.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
34.65
Price Trends
36.99
Negative
36.62
Negative
37.60
Negative
Market Momentum
-0.71
Positive
35.13
Neutral
36.55
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 34.65 is below the 20-day moving average (MA) of 37.05, below the 50-day MA of 36.99, and below the 200-day MA of 37.60, indicating a bearish trend. The MACD of -0.71 indicates Positive momentum. The RSI at 35.13 is Neutral, neither overbought nor oversold. The STOCH value of 36.55 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 (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | $21.28B | 6.40 | 22.96% | 1.83% | 19.73% | 65.57% | |
74 Outperform | $42.15B | 9.46 | 24.68% | 1.67% | 15.25% | 45.76% | |
72 Outperform | $66.03B | 14.94 | 7.86% | 1.39% | 9.06% | -3.02% | |
72 Outperform | $26.63B | 12.71 | 11.92% | 3.59% | 11.21% | -2.26% | |
71 Outperform | $5.94B | 24.87 | 14.15% | ― | 13.70% | -9.00% | |
64 Neutral | $14.34B | 10.61 | 9.28% | 4.07% | 18.04% | -9.54% | |
60 Neutral | $10.75B | 19.46 | 6.63% | 3.46% | 3.41% | -12.41% |
* Financial Sector Average
Performance Comparison
ALLY
Ally Financial
34.65
-1.69
-4.65%
COF
Capital One Financial
173.17
36.76
26.95%
CACC
Credit Acceptance
493.91
-56.36
-10.24%
DFS
Discover Financial Services
167.52
47.82
39.95%
FITB
Fifth Third Bancorp
40.06
4.67
13.20%
SYF
Synchrony Financial
54.74
13.01
31.18%
Ally Financial Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: -8.55% | Next Earnings Date: Apr 17, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong performance in Corporate Finance and growth in deposits and insurance, alongside strategic decisions to focus on core businesses. However, it also included significant restructuring efforts, including the sale of the Credit Card business, workforce reductions, and the impact of accounting changes. These measures reflect a focus on long-term growth but present immediate challenges.Highlights
Record Pretax Income in Corporate Finance
Corporate Finance delivered record pretax income of more than $400 million and an ROE of 37% with zero net charge-offs, demonstrating strong credit performance.
Deposit Franchise Growth
Ally added more than 230,000 new customers, serving 3.3 million depositors with $143 billion in balances, marking a consistent year-over-year increase.
Insurance Segment Achievements
Insurance written premiums reached $1.5 billion, the highest since IPO, supported by new relationships and growing inventory exposure.
Recognition for Brand and Culture
Ally was recognized by Fast Company for the third consecutive year as a brand that matters, the only financial services brand with this distinction.
Lowlights
Sale of Credit Card Business and Mortgage Cease
Ally announced the sale of its Credit Card business and ceased new mortgage loan originations, impacting potential revenue streams.
Workforce Reduction
Ally announced a workforce reduction, resulting in a $22 million restructuring charge, aimed at contributing over $60 million in annualized savings.
Impact of EV Lease Accounting Change
Change to the deferral method for EV lease tax credits reduced retained earnings by approximately $300 million and CET1 by 20 basis points.
Company Guidance
During Ally Financial's Q4 2024 earnings call, the company provided several key metrics and strategic guidance. Ally delivered an adjusted EPS of $2.35, core pretax income of $1 billion, and revenues of $8.2 billion for the year. Fourth-quarter results aligned with or exceeded the guidance provided in October, with a net financing revenue of $1.5 billion and an adjusted other revenue of $564 million, which was up 13% year-over-year. The company announced plans to sell its Credit Card business, expected to add 40 basis points to CET1 at closing, while ceasing new mortgage loan originations. Retail auto net charge-offs were 234 basis points, with expectations of 2% to 2.25% for 2025. Ally achieved a record $400 million pretax income in Corporate Finance with a 37% ROE and maintained strong customer satisfaction and retention rates in its deposits franchise. The company emphasized its commitment to a focused approach in areas with competitive advantages to achieve mid-teens ROTCE in the medium term.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.