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Ally Financial (ALLY)
NYSE:ALLY
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Ally Financial (ALLY) AI Stock Analysis

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ALLY

Ally Financial

(NYSE:ALLY)

Rating:52Neutral
Price Target:
$38.00
▼(-8.12% Downside)
Ally Financial's overall stock score reflects a combination of financial challenges and operational strengths. The most significant factor is the company's financial performance, which is hindered by declining revenue and high leverage. Technical analysis and valuation indicate moderate concerns, while the earnings call provides some optimism with strong performance in key segments. The absence of notable corporate events leaves the focus on improving financial stability and operational efficiency.
Positive Factors
Earnings
ALLY reported adjusted EPS of $0.99, above estimates and consensus.
Financial Performance
Net interest margin beat expectations at 3.45%, showing improved financial performance.
Negative Factors
Financial Guidance
Disappointment management didn’t revise lower its FY25 retail auto loan loss guidance after a better-than-expected 1Q.
Market Performance
Shares have underperformed peers over the last month.

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

Ally Financial Business Overview & Revenue Model

Company DescriptionAlly Financial Inc. is a diversified financial services company headquartered in Detroit, Michigan. It operates primarily in the automotive finance sector and offers a range of financial products and services including auto financing, banking, and insurance. The company serves consumers, dealers, and automotive manufacturers, providing solutions such as vehicle financing, online banking products, and investment services through its Ally Bank subsidiary.
How the Company Makes MoneyAlly Financial generates revenue through several key streams. The primary source of income comes from its automotive finance segment, where it earns interest income from loans and leases made to consumers and dealers. Additionally, Ally Bank contributes to the revenue through interest on deposits and fees associated with its online banking products, including savings and checking accounts. The company also earns money from its insurance operations, providing various auto-related insurance products. Significant partnerships with automotive manufacturers and dealerships enhance its financing capabilities, while its focus on digital banking allows it to operate with lower overhead costs, further boosting profitability.

Ally Financial Earnings Call Summary

Earnings Call Date:Jul 18, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Oct 15, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with improvements in key areas such as net interest margin, auto finance growth, and credit quality. Despite some challenges like deposit balance decline and higher insurance costs, the company demonstrates robust strategic execution and momentum.
Q2-2025 Updates
Positive Updates
Strong Financial Performance
Ally Financial reported adjusted earnings per share of $0.99 and core pre-tax income of $480 million, achieving double-digit year-over-year growth in both metrics.
Net Interest Margin Improvement
Net interest margin excluding core OID was 3.45%, expanding ten basis points quarter over quarter, more than offsetting a twenty basis point drag from the credit card business sale.
Robust Auto Finance Growth
Consumer originations reached $11 billion, driven by 3.9 million applications, marking the highest quarterly application volume ever for the second consecutive quarter.
Insurance Business Momentum
Average dealer inventory exposure rose by 23% year-over-year, with 3.9 million active policies outstanding, an increase of over one million since IPO.
Digital Bank Growth
The digital bank serves an all-time high of 3.4 million customers, marking 65 consecutive quarters of net customer growth, with balances of $143 billion.
Improved Credit Quality
Consolidated net charge-off rate was 1.10%, a decline of 40 basis points to the prior quarter and a decrease of 16 basis points to the prior year.
Negative Updates
Deposit Balance Decline
Overall deposit balance was down approximately $3 billion quarter over quarter, aligned with seasonal tax outflows.
Higher Insurance Costs
The renewal of the annual excess of loss policy came at a higher cost due to increased coverage levels, impacting current period results.
Commercial Floor Plan Balances
Commercial floor plan balances were muted partly due to tariffs, impacting dealer inventory levels.
Company Guidance
During the Q2 2025 earnings call, Ally Financial provided a comprehensive update on its financial performance and strategic direction. The company reported adjusted earnings per share of $0.99 and core pre-tax income of $480 million, showcasing double-digit year-over-year growth. The net interest margin, excluding core OID, expanded by ten basis points to 3.45%, despite a twenty basis point impact from selling its credit card business. Ally also achieved a core ROTCE of 13.6% for the quarter, with a core ROTCE of 10% when excluding AOCI benefits. The auto finance business reported consumer originations of $11 billion, driven by 3.9 million applications, marking the highest quarterly application volume for the second consecutive quarter. The company's insurance segment saw average dealer inventory exposure rise by 23% year-over-year. Meanwhile, in corporate finance, Ally generated a 31% ROE with attractive floating rate yields. The digital bank segment continued its growth, serving a record 3.4 million customers and maintaining deposit balances of $143 billion. Overall, Ally's strategic focus on disciplined execution, risk management, and customer-centric culture remains strong, positioning the company for sustainable returns and growth.

Ally Financial Financial Statement Overview

Summary
Ally Financial is experiencing challenges in profitability and cash flow generation. The net profit margin has notably declined, and there's pressure on operational efficiency with reduced EBIT and EBITDA margins. While the balance sheet shows moderate leverage and stability, improvements in profitability and free cash flow are essential for better financial health.
Income Statement
65
Positive
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
70
Positive
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
60
Neutral
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.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue15.52B16.37B15.97B12.10B10.69B10.72B
Gross Profit6.79B6.73B7.10B7.84B8.54B6.04B
EBITDA1.72B2.04B2.33B3.67B5.12B2.96B
Net Income344.00M668.00M957.00M1.71B3.06B1.08B
Balance Sheet
Total Assets189.47B191.84B196.33B191.83B182.11B182.16B
Cash, Cash Equivalents and Short-Term Investments29.36B29.30B26.66B31.21B38.45B45.31B
Total Debt19.73B19.23B20.98B20.30B17.20B24.33B
Total Liabilities174.93B177.93B182.63B178.97B165.06B167.46B
Stockholders Equity14.55B13.90B13.70B12.86B17.05B14.70B
Cash Flow
Free Cash Flow-252.00M1.07B1.80B2.71B-1.08B-581.00M
Operating Cash Flow3.50B4.53B4.56B6.25B4.04B3.74B
Investing Cash Flow4.17B4.99B-7.18B-17.26B-11.10B8.43B
Financing Cash Flow-4.28B-5.57B3.84B11.57B-3.85B25.00M

Ally Financial Technical Analysis

Technical Analysis Sentiment
Positive
Last Price41.36
Price Trends
50DMA
39.17
Positive
100DMA
36.74
Positive
200DMA
36.30
Positive
Market Momentum
MACD
0.84
Negative
RSI
68.59
Neutral
STOCH
79.22
Neutral
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 41.36 is above the 20-day moving average (MA) of 39.64, above the 50-day MA of 39.17, and above the 200-day MA of 36.30, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 68.59 is Neutral, neither overbought nor oversold. The STOCH value of 79.22 is Neutral, 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
78
Outperform
$28.13B9.1920.23%1.46%-3.16%14.60%
76
Outperform
$7.31B11.1220.47%6.76%9.41%13.98%
72
Outperform
$30.35B51.638.80%22.60%
69
Neutral
$5.87B15.0727.30%12.63%149.03%
68
Neutral
$17.80B11.8710.23%3.74%9.69%1.18%
61
Neutral
$6.49B15.7118.99%1.67%-4.34%-38.01%
52
Neutral
$12.73B26.874.18%2.90%-5.33%-32.99%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
ALLY
Ally Financial
41.36
3.00
7.82%
CACC
Credit Acceptance
522.61
75.42
16.87%
SLM
SLM
31.11
11.31
57.12%
SYF
Synchrony Financial
75.61
28.30
59.82%
OMF
OneMain Holdings
61.50
20.80
51.11%
SOFI
SoFi
25.60
18.52
261.58%

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
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: Aug 13, 2025