Ally Financial (ALLY) AI Stock Analysis

• Market Cap: $9.77B
• Dividend Yield: 3.77%
• Average Volume (3M): 5.37M
• Price to Earnings (P/E): 17.7
• Beta (1Y): 1.36
• Revenue Growth: 3.41%
• EPS Growth: -12.41%
• Country: US
• Employees: 10,700
• Sector: Financial
• Sector Strength: 83
• Industry: Financial - Credit Services
• EPS (TTM): 2.60
• Shares Outstanding: 307,135,220
• 10 Day Avg. Volume: 6,274,880
• 30 Day Avg. Volume: 5,367,278
• PEG Ratio: N/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 Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $41.20
• Price Target Upside: 27.91% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

Ally Financial demonstrates strong growth in revenue and strategic restructuring efforts to focus on core business areas, which are positive indicators for long-term growth. However, challenges such as declining profitability margins, high P/E ratio, and significant restructuring costs pose risks. The technical analysis shows a mixed outlook, with potential resistance at current levels. Overall, the stock presents moderate growth potential with some caution due to profitability and valuation concerns.

Positive Factors

Auto lending

The competitive dynamic continues to be favorable in auto lending.

Financial performance

Recent reductions in deposit rates, coupled with continued upward re-pricing of retail auto loans, is enough to offset card loss.

Net Interest Margin (NIM)

Investment portfolio repositioning will modestly increase net interest income and NIM going forward.

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.

Recession fears

Recession fears will more likely dictate stock performance.

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 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.

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.

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.

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

• Technical Analysis Sentiment: Negative
• Last Price: 32.21
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 32.21 is below the 20-day moving average (MA) of 34.83, below the 50-day MA of 35.85, and below the 200-day MA of 37.13, indicating a bearish trend. The MACD of -1.12 indicates Positive momentum. The RSI at 40.83 is Neutral, neither overbought nor oversold. The STOCH value of 31.92 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for ALLY.

Ally Financial Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DFS	77 Outperform	$39.51B	8.87	24.68%	1.78%	15.46%	45.83%
CACC	73 Outperform	$5.93B	24.84	14.15%	―	13.70%	-9.00%
SYF	72 Outperform	$17.93B	5.39	22.96%	2.17%	19.73%	65.57%
COF	71 Outperform	$61.64B	13.89	7.86%	1.49%	9.06%	-3.02%
ALLY	69 Neutral	$9.77B	17.68	6.63%	3.77%	3.41%	-12.41%
FITB	67 Neutral	$22.61B	10.79	11.92%	4.31%	11.21%	-2.26%
Sector *	63 Neutral	$13.51B	9.48	9.36%	4.87%	16.09%	-8.30%

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.