Ally Financial (ALLY) AI Stock Analysis

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Ally Financial

(NYSE:ALLY)

Select Model

Neutral 67 (OpenAI - 4o)

Rating:67Neutral

Price Target:

$45.00

▲(9.28% Upside)

Ally Financial's overall stock score reflects a stable financial position with positive technical momentum and strong earnings growth. However, high leverage and negative free cash flow pose risks. The stock's valuation appears stretched, limiting its attractiveness. The earnings call provided a positive outlook, but macroeconomic uncertainties remain a concern.

Positive Factors

Earnings Growth

Significant earnings growth indicates strong operational performance and effective cost management, enhancing long-term profitability.

Digital Banking Expansion

Growth in digital banking reflects successful customer acquisition and retention, supporting sustainable revenue streams.

AI Platform Introduction

The introduction of AI enhances operational efficiency and innovation, positioning the company for future technological advancements.

Negative Factors

High Leverage

High leverage can increase financial risk, particularly in volatile markets, potentially impacting long-term financial stability.

Negative Free Cash Flow

Negative free cash flow suggests challenges in generating cash from operations, which could constrain future investment and growth.

Revenue Decline

Declining revenue growth may indicate challenges in market expansion or competitive pressures, affecting long-term growth prospects.

Ally Financial (ALLY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$12.69B

Dividend Yield2.91%

Average Volume (3M)2.77M

Price to Earnings (P/E)24.8

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)1.15

Shares Outstanding308,053,200

10 Day Avg. Volume2,498,446

30 Day Avg. Volume2,771,057

Financial Highlights & Ratios

PEG Ratio-0.47

Price to Book (P/B)0.79

Price to Sales (P/S)0.68

P/FCF Ratio10.35

Enterprise Value/Market Cap2.65

Enterprise Value/Revenue2.19

Enterprise Value/Gross Profit4.87

Enterprise Value/Ebitda19.91

Forecast

1Y Price Target

$49.00

Price Target Upside18.99% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering13

EPS Forecast (FY)3.76

Revenue Forecast (FY)$7.93B

Ally Financial Business Overview & Revenue Model

Company DescriptionAlly Financial Inc. is a leading digital financial services company based in the United States, specializing in automotive finance, online banking, and various consumer financial products. The company primarily operates in the automotive sector, providing vehicle financing solutions, including retail and wholesale financing for automotive dealers and their customers. Additionally, Ally offers a range of banking products such as savings accounts, certificates of deposit, and mortgage loans, leveraging its digital platform to deliver innovative and customer-friendly financial services.

How the Company Makes MoneyAlly Financial generates revenue through multiple key streams. The largest portion comes from its automotive finance segment, which includes interest income from loans and leases provided to consumers and dealerships. The company also earns fees from servicing these loans. Furthermore, Ally's online banking division contributes significantly through interest earned on deposits and fees associated with its banking products. Additionally, Ally engages in capital markets activities, including securitization, which helps manage risk and generate income. Partnerships with automotive manufacturers and dealers enhance its market reach, while its digital-first approach attracts a growing customer base, further bolstering its revenue generation.

Ally Financial Key Performance Indicators (KPIs)

Any

Assets by Segment

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.

Chart InsightsAlly Financial's asset distribution reveals strategic shifts, notably the cessation of Mortgage Finance Operations in 2024. Automotive Finance Operations, despite recent fluctuations, remains robust, supported by record consumer originations. Insurance Operations show steady growth, aligning with increased dealer inventory exposure. Meanwhile, Corporate Finance Operations demonstrate resilience with a 31% ROE, benefiting from attractive floating rate yields. The earnings call highlights strong financial performance, particularly in auto finance and digital banking, despite challenges like deposit balance declines and higher insurance costs, indicating a focus on sustainable growth and risk management.

Data provided by:

The Fly

Ally Financial Earnings Call Summary

Earnings Call Date:Oct 17, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Jan 16, 2026

Earnings Call Sentiment Positive

Ally Financial demonstrated strong financial performance in the third quarter, with significant earnings growth, improved credit trends, and strategic enhancements in digital banking and AI. However, there are challenges related to the impact of the credit card business sale and potential macroeconomic risks.

Q3-2025 Updates

Positive Updates

Significant Year-Over-Year Earnings Growth

Adjusted EPS increased by 166% to $1.15 per share. Core ROTCE was 15% on a headline basis and about 12% excluding the impact of AOCI.

Strong Performance in Dealer Financial Services

Consumer originations reached $11.7 billion, driven by a record 4 million applications. Originated yield was at 9.7% with 42% of originations for the highest credit quality tier.

Improved Credit Trends

Consolidated net charge-off rate decreased by 32 basis points to 118 basis points. Retail auto net charge-off rate was 188 basis points, down 36 basis points year over year.

Growth in Digital Banking

Ended the quarter with $142 billion in balances, serving 3.4 million customers. Deposits represent nearly 90% of total funding, with 92% FDIC insured.

CET1 Ratio Improvement

CET1 ratio increased to 10.1%, representing $4.5 billion of excess capital above the regulatory minimum.

Corporate Finance Growth

Generated a 30% ROE with a 10% increase in the loan portfolio.

Introduction of AI Platform

Rolled out proprietary AI platform, ally.ai, to 10,000 teammates to streamline tasks and automate routine work.

Negative Updates

Impact of Credit Card Business Sale

Third quarter adjusted net revenue was up 3% year over year, but only after accounting for the sale of the credit card business. Excluding the sale, year-over-year net revenue growth was 9%.

Potential Risks from Macro Environment

Acknowledged uncertain macroeconomic outlook and potential softening employment, which could affect credit trends.

Company Guidance

During the third quarter of 2025, Ally Financial reported significant financial growth, highlighted by a 166% year-over-year increase in adjusted earnings per share (EPS) to $1.15. The company achieved a core return on tangible common equity (ROTCE) of 15% and a net interest margin of 3.55%, up 10 basis points from the previous quarter. Adjusted net revenue rose 3% year-over-year to $2.2 billion, with net revenue growth reaching 9% when excluding the impact of the credit card business sale. Ally maintained a Common Equity Tier 1 (CET1) ratio of 10.1%, equating to $4.5 billion in excess capital. The company's consumer originations reached $11.7 billion, driven by a record 4 million applications, with a strong emphasis on high credit quality loans. Despite macroeconomic uncertainties, Ally reported favorable credit trends, with a consolidated net charge-off rate of 118 basis points and retail auto net charge-offs at 1.88%. The company remains committed to disciplined expense management and capital allocation, leveraging its proprietary AI platform to enhance operational efficiency.

Ally Financial Financial Statement Overview

Summary

Ally Financial faces challenges with declining revenue and profitability, high leverage, and weak cash flow generation. The company needs to focus on improving operational efficiency, reducing debt levels, and enhancing cash flow to strengthen its financial position and support future growth.

Income Statement

Positive

Ally Financial's income statement shows a declining trend in revenue with a negative growth rate of -98.9% in the TTM period. The gross profit margin remains stable at around 40%, but the net profit margin has decreased to 3.95%. EBIT and EBITDA margins have also declined, indicating reduced operational efficiency. The company needs to address these declining margins and revenue trends to improve profitability.

Balance Sheet

Neutral

The balance sheet reflects a high debt-to-equity ratio of 1.36, indicating significant leverage. However, the return on equity is relatively low at 4.12%, suggesting that the company is not effectively using its equity base to generate profits. The equity ratio is not provided, but the high leverage poses a risk to financial stability.

Cash Flow

Neutral

Cash flow analysis reveals a concerning trend with negative free cash flow growth of -139.87% in the TTM period. The operating cash flow to net income ratio is moderate at 0.56, but the free cash flow to net income ratio is low at 0.15, indicating challenges in converting earnings into cash flow. The company needs to improve its cash flow generation to support operations and debt obligations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	15.32B	16.37B	15.97B	12.10B	10.69B	10.72B
Gross Profit	6.90B	6.73B	7.10B	7.84B	8.54B	6.04B
EBITDA	1.69B	2.04B	2.33B	3.67B	5.12B	2.96B
Net Income	385.00M	668.00M	957.00M	1.71B	3.06B	1.08B
Balance Sheet
Total Assets	191.71B	191.84B	196.33B	191.83B	182.11B	182.16B
Cash, Cash Equivalents and Short-Term Investments	32.93B	29.30B	26.66B	31.21B	38.45B	45.31B
Total Debt	20.63B	19.23B	20.98B	20.30B	17.20B	24.33B
Total Liabilities	176.59B	177.93B	182.63B	178.97B	165.06B	167.46B
Stockholders Equity	15.12B	13.90B	13.70B	12.86B	17.05B	14.70B
Cash Flow
Free Cash Flow	-592.00M	1.07B	1.80B	2.71B	-1.08B	-581.00M
Operating Cash Flow	3.71B	4.53B	4.56B	6.25B	4.04B	3.74B
Investing Cash Flow	724.00M	4.99B	-7.18B	-17.26B	-11.10B	8.43B
Financing Cash Flow	-2.13B	-5.57B	3.84B	11.57B	-3.85B	25.00M

Ally Financial Technical Analysis

Technical Analysis Sentiment

Positive

Last Price41.18

Price Trends

50DMA

39.58

Positive

100DMA

39.55

Positive

200DMA

37.20

Positive

Market Momentum

MACD

0.37

Negative

RSI

59.01

Neutral

STOCH

91.33

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 41.18 is above the 20-day moving average (MA) of 39.51, above the 50-day MA of 39.58, and above the 200-day MA of 37.20, indicating a bullish trend. The MACD of 0.37 indicates Negative momentum. The RSI at 59.01 is Neutral, neither overbought nor oversold. The STOCH value of 91.33 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 (68)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OMF	77 Outperform	$7.42B	10.70	21.41%	6.61%	9.51%	29.38%
SYF	72 Outperform	$28.11B	8.53	21.64%	1.46%	-6.38%	19.65%
SLM	72 Outperform	$6.04B	10.49	27.85%	1.95%	0.59%	-1.11%
SOFI	71 Outperform	$35.59B	53.51	8.59%	―	22.40%	215.81%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
ALLY	67 Neutral	$12.69B	24.80	4.25%	2.91%	-6.89%	-33.20%
CACC	66 Neutral	$4.74B	11.38	28.14%	―	10.30%	154.64%

* Financial Sector Average

Performance Comparison

ALLY

Ally Financial

41.18

3.58

9.52%

CACC

Credit Acceptance

466.24

-11.18

-2.34%

SLM

29.78

3.41

12.93%

SYF

Synchrony Financial

78.88

13.23

20.15%

OMF

OneMain Holdings

63.05

9.97

18.78%

SOFI

SoFi

29.51

13.19

80.82%

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.Date of analysis: Dec 03, 2025