Ally Financial (ALLY) AI Stock Analysis

• Market Cap: $11.15B
• Dividend Yield: 3.28%
• Average Volume (3M): 3.88M
• Price to Earnings (P/E): 26.7
• Beta (1Y): 1.28
• Revenue Growth: -2.99%
• EPS Growth: -43.64%
• Country: US
• Employees: 10,700
• Sector: Financial
• Sector Strength: 79
• Industry: Financial - Credit Services
• EPS (TTM): 0.58
• Shares Outstanding: 307,174,700
• 10 Day Avg. Volume: 5,695,060
• 30 Day Avg. Volume: 3,880,045
• PEG Ratio: -0.27
• Price to Book (P/B): 0.77
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 5.90
• Enterprise Value/Market Cap: 1.79
• Enterprise Value/Revenue: 0.31
• Enterprise Value/Gross Profit: 3.03
• Enterprise Value/Ebitda: 2.61
• 1Y Price Target: $39.86
• Price Target Upside: 8.34% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

• Rating: 63 Neutral
• Price Target: $36.00 ▼(-2.15%Downside)

Ally Financial receives an overall stock score of 63, reflecting operational and valuation challenges balanced by some strategic growth areas. The company's mixed financial performance, particularly in profitability and cash flow, weighs on the score. However, positive earnings call sentiment and growth in strategic areas like auto finance and digital banking provide offsetting strengths. The technical analysis suggests a stable trend without strong directional momentum, while high valuation metrics indicate potential overpricing.

Positive Factors

Credit Quality

Used car prices increased with tariffs, which should provide some support to credit quality.

Net Interest Margin

The path to improved returns becomes clearer as the path to 3.80% NIM is viewed as very attainable.

Retail Auto Loans

Retail auto loan losses were lower than expected in 1Q, but management reiterated its FY25 outlook.

Negative Factors

Downside Risk

There is a belief in downside risk particularly if book value and loan principal become the focus.

Earnings Expectations

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

Financial Health

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.

Ally Financial Business Overview & Revenue Model

Company Description

Ally Financial Inc. is a leading digital financial services company headquartered in Detroit, Michigan. The company operates across various sectors, including automotive finance, insurance, online banking, and mortgage services. Ally Financial is well-known for its online banking services, offering a full suite of deposit products, personal lending, and credit card services, as well as its comprehensive auto finance operations that serve both consumers and dealers.

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's financial statements show mixed results. The income statement reveals stable gross profit margins but declining net profit margins and revenue, indicating operational challenges. The balance sheet is moderately leveraged with a decrease in ROE. Cash flow generation is strong relative to net income, but the decline in free cash flow is concerning. Overall, the company faces profitability and cash flow generation challenges, though it maintains reasonable financial stability.

Income Statement

Ally Financial's income statement shows a mixed performance. The trailing twelve months (TTM) gross profit margin is approximately 42.1%, which is stable, but there is a notable decline in net profit margin to about 1.8% from 4.1% in the previous year. EBIT and EBITDA margins have also decreased, indicating pressure on operational efficiency. Revenue has seen a decline, evidenced by a negative growth rate of -4.2% compared to the previous annual report, which could be a concern if the trend continues.

Balance Sheet

The balance sheet reflects a moderate financial position with some areas of concern. The debt-to-equity ratio stands at 1.4, indicating moderate leverage, which is acceptable but should be closely monitored. Return on Equity (ROE) has decreased to 2.0%, down from 4.8%, highlighting challenges in generating profit from shareholder investments. However, the equity ratio is stable at 7.4%, suggesting a reasonable portion of assets are financed by equity. Overall, the company's financial stability seems adequate, but improvements in profitability are needed.

Cash Flow

Cash flow analysis exhibits some weaknesses. The operating cash flow to net income ratio is robust at 14.7, suggesting strong cash generation relative to net income. However, free cash flow has decreased significantly, with a negative growth rate of -40.8%, which could limit financial flexibility. The free cash flow to net income ratio is 2.2, indicating that free cash flow is lower compared to net income, a potential area for improvement. While cash flow generation remains, the decline in free cash flow should be monitored.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
15.68B	16.37B	15.97B	12.10B	10.69B	10.72B
	Gross Profit
6.60B	6.73B	7.10B	7.84B	8.54B	6.04B
	EBIT
381.00M	836.00M	1.10B	2.34B	3.85B	1.41B
	EBITDA
1.63B	2.04B	2.33B	3.67B	5.12B	2.96B
	Net Income Common Stockholders
286.00M	668.00M	957.00M	1.71B	3.06B	1.08B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
32.34B	29.30B	26.66B	31.21B	38.45B	45.31B
	Total Assets
182.53B	191.84B	196.33B	191.83B	182.11B	182.16B
	Total Debt
40.78B	19.23B	20.98B	20.30B	17.20B	24.33B
	Net Debt
34.62B	8.94B	14.04B	14.73B	12.14B	8.71B
	Total Liabilities
169.01B	177.93B	182.63B	178.97B	165.06B	167.46B
	Stockholders Equity
13.52B	13.90B	13.70B	12.86B	17.05B	14.70B
Cash Flow		Free Cash Flow
632.00M	1.07B	1.80B	2.71B	-1.08B	-581.00M
	Operating Cash Flow
4.20B	4.53B	4.56B	6.25B	4.04B	3.74B
	Investing Cash Flow
74.00M	4.99B	-7.18B	-17.26B	-11.10B	8.43B
	Financing Cash Flow
-1.49B	-5.57B	3.84B	11.57B	-3.85B	25.00M

Ally Financial Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 36.79
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• 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 36.79 is above the 20-day moving average (MA) of 35.42, above the 50-day MA of 33.96, and above the 200-day MA of 35.82, indicating a bullish trend. The MACD of 0.58 indicates Negative momentum. The RSI at 63.29 is Neutral, neither overbought nor oversold. The STOCH value of 92.51 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	73 Outperform	$5.87B	21.63	17.24%	―	13.77%	20.95%
SYF	71 Outperform	$22.54B	8.13	18.60%	1.73%	1.22%	4.96%
SOFI	71 Outperform	$15.74B	33.51	7.51%	―	21.24%	―
OMF	68 Neutral	$6.35B	11.29	17.46%	7.87%	9.07%	―
SLM	66 Neutral	$6.75B	11.58	27.60%	1.51%	-0.70%	-12.72%
Sector *	64 Neutral	$12.83B	9.78	7.78%	16985.64%	12.26%	-7.81%
ALLY	63 Neutral	$11.15B	26.68	3.84%	3.28%	-2.99%	-43.64%

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.