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Ally Financial (ALLY)
NYSE:ALLY
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Ally Financial
(NYSE:ALLY)
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Rating:60Neutral
Price Target:
$45.00
▲(6.43% Upside)
The score is anchored by middling financial performance (leverage and negative free cash flow are key constraints). Positive earnings-call guidance and improving profitability metrics provide support, but weak technical momentum and a relatively high P/E limit upside in the near term.
Positive Factors
Earnings & EPS improvement
Material EPS improvement reflects stronger operating performance and earnings leverage across core franchises. Sustained higher earnings enhance ability to build capital, fund growth initiatives, and support gradual shareholder returns, provided credit and margins remain stable.
Stable, sticky deposit funding
A large, mainly FDIC-insured retail deposit base provides durable, low-cost funding and reduces wholesale funding reliance. This funding stability underpins lending growth, mitigates funding volatility risks, and supports margin resilience across economic cycles.
Scale in auto origination & dealer relationships
High dealer application volumes and rising originations signal strong market share and distribution advantages in auto finance. Scale improves pricing, risk segmentation, and cross-sell opportunities (insurance, auctions), supporting durable growth and return potential in the core franchise.
Negative Factors
Elevated financial leverage
High leverage and a low equity ratio increase sensitivity to credit losses and rate shocks, constraining financial flexibility. Sustained reliance on debt elevates funding and regulatory strain during downturns and lengthens the path to desired capital targets.
Weak cash generation
Negative free cash flow and very low operating cash conversion limit internal funding for growth, reserves, and buybacks. Weak cash generation forces reliance on earnings retention or external financing to meet capital goals, reducing near-term strategic optionality.
Capitalization below internal target
CET1 below management's 9% objective constrains capital returns and necessitates continued capital buildup. Until capital metrics reach targets, the firm may limit buybacks/dividends or retain earnings, reducing flexibility to accelerate shareholder distributions.
Ally Financial (ALLY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$13.02B
Dividend Yield2.58%
Average Volume (3M)3.07M
Price to Earnings (P/E)17.8
Beta (1Y)1.10
Revenue Growth-6.89%
EPS Growth-33.20%
CountryUS
Employees10,700
SectorFinancial
Sector Strength70
IndustryFinancial - Credit Services
Share Statistics
EPS (TTM)1.09
Shares Outstanding308,053,200
10 Day Avg. Volume4,591,886
30 Day Avg. Volume3,071,418
Financial Highlights & Ratios
PEG Ratio0.53
Price to Book (P/B)0.91
Price to Sales (P/S)1.16
P/FCF Ratio0.00
Enterprise Value/Market Cap1.90
Enterprise Value/Revenue2.04
Enterprise Value/Gross Profit3.92
Enterprise Value/Ebitda12.59
Forecast
1Y Price Target
$54.07Price Target Upside27.89% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
EPS Forecast (FY)5.33
Revenue Forecast (FY)$9.03B
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 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
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 16, 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
Mixed fundamentals: modest income-statement strength (stable gross margin but low net margin and softer revenue growth), elevated leverage (debt-to-equity 1.36 and low equity ratio 7.89%), and weak cash conversion with negative free cash flow and a very low operating cash flow to net income ratio.Income Statement
Ally Financial's income statement shows a mixed performance. The TTM data indicates a slight decline in revenue growth at -1.34%, following a previous annual growth of 2.52%. Gross profit margin remains stable at 45.04%, but net profit margin is relatively low at 4.13%. The EBIT and EBITDA margins have decreased compared to previous years, indicating potential challenges in operational efficiency.65
Positive
Balance Sheet
The balance sheet reflects a high debt-to-equity ratio of 1.36, indicating significant leverage, which could pose risks in volatile markets. Return on equity is modest at 4.38%, suggesting limited profitability from equity investments. The equity ratio stands at 7.89%, highlighting a reliance on debt financing.60
Neutral
Cash Flow
Cash flow analysis reveals concerns with free cash flow, which is negative at -$592 million, despite a growth rate of 134.92%. The operating cash flow to net income ratio is low at 0.024, indicating potential cash flow constraints. The free cash flow to net income ratio is negative, suggesting challenges in converting profits into free cash flow.55
Neutral
| 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 | 1.97B | 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 | 0.00 | 1.07B | 1.80B | 2.71B | -1.08B |
| Operating Cash Flow | 0.00 | 4.53B | 4.56B | 6.25B | 4.04B |
| Investing Cash Flow | 0.00 | 4.99B | -7.18B | -17.26B | -11.10B |
| Financing Cash Flow | 0.00 | -5.57B | 3.84B | 11.57B | -3.85B |
Ally Financial Technical Analysis
Negative
42.28
Price Trends
43.38
Negative
41.77
Positive
39.16
Positive
Market Momentum
-0.54
Positive
42.33
Neutral
66.62
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 42.28 is below the 20-day moving average (MA) of 43.87, below the 50-day MA of 43.38, and above the 200-day MA of 39.16, indicating a neutral trend. The MACD of -0.54 indicates Positive momentum. The RSI at 42.33 is Neutral, neither overbought nor oversold. The STOCH value of 66.62 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $7.72B | 11.12 | 21.41% | 6.07% | 9.51% | 29.38% | |
73 Outperform | $5.50B | 13.65 | 28.14% | ― | 10.30% | 154.64% | |
73 Outperform | $4.08B | 14.26 | 24.34% | ― | 21.10% | 76.12% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
66 Neutral | $26.16B | 7.83 | 21.18% | 1.34% | -6.38% | 19.65% | |
62 Neutral | $5.51B | 7.85 | 32.31% | 1.88% | 0.59% | -1.11% | |
60 Neutral | $13.02B | 17.84 | 5.80% | 2.58% | -6.89% | -33.20% |
* Financial Sector Average
ALLY
Ally Financial
42.28
5.11
13.74%
CACC
Credit Acceptance
498.24
-12.36
-2.42%
SLM
SLM
27.15
-0.39
-1.40%
SYF
Synchrony Financial
72.63
6.03
9.05%
OMF
OneMain Holdings
65.54
14.97
29.59%
ENVA
Enova International
165.17
54.33
49.02%
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.