Ally Financial (ALLY) AI Stock Analysis

• Market Cap: $12.41B
• Dividend Yield: 2.91%
• Average Volume (3M): 4.05M
• Price to Earnings (P/E): 29.7
• Beta (1Y): 1.28
• Revenue Growth: -2.99%
• EPS Growth: -43.64%
• Country: US
• Employees: 10,700
• Sector: Financial
• Sector Strength: 81
• Industry: Financial - Credit Services
• EPS (TTM): 0.58
• Shares Outstanding: 307,174,700
• 10 Day Avg. Volume: 3,074,269
• 30 Day Avg. Volume: 4,050,231
• PEG Ratio: -0.12
• Price to Book (P/B): 0.60
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 2.85
• Enterprise Value/Market Cap: 1.80
• Enterprise Value/Revenue: 0.34
• Enterprise Value/Gross Profit: 3.38
• Enterprise Value/Ebitda: 2.92
• 1Y Price Target: $40.67
• Price Target Upside: 0.64% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 68 Neutral
• Price Target: $42.00 ▲(3.93%Upside)

Ally Financial's overall stock score is primarily influenced by its financial performance and technical analysis. While technical indicators show bullish momentum, financial challenges, particularly in profitability and cash flow, weigh on the score. The high P/E ratio suggests potential overvaluation, and mixed sentiment from the earnings call reflects both growth opportunities and significant challenges.

Positive Factors

Credit Quality

Credit trends remain positive, supported by favorable vintage dynamics.

Earnings

Lower credit costs primarily drove 1Q25 EPS beat.

Financial Performance

Retail auto charge-offs were down 15 bps y/y, and were $25mm better than forecast.

Negative Factors

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.

Loan Losses

There is concern that Ally will continue to sell loans for large losses, which could negatively impact its financial health.

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
EBITDA	1.63B	2.04B	2.33B	3.67B	5.12B	2.96B
Net Income	286.00M	668.00M	957.00M	1.71B	3.06B	1.08B
Balance Sheet
Total Assets	193.33B	191.84B	196.33B	191.83B	182.11B	182.16B
Cash, Cash Equivalents and Short-Term Investments	28.55B	29.30B	26.66B	31.21B	38.45B	45.31B
Total Debt	19.91B	19.23B	20.98B	20.30B	17.20B	24.33B
Total Liabilities	179.10B	177.93B	182.63B	178.97B	165.06B	167.46B
Stockholders Equity	14.23B	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: 40.41
• 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 40.41 is above the 20-day moving average (MA) of 38.15, above the 50-day MA of 35.96, and above the 200-day MA of 35.81, indicating a bullish trend. The MACD of 1.38 indicates Negative momentum. The RSI at 69.30 is Neutral, neither overbought nor oversold. The STOCH value of 84.04 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
SYF	77 Outperform	$26.53B	9.57	18.60%	1.71%	1.22%	4.96%
SYF	77 Outperform	$26.53B	9.57	18.60%	1.71%	1.22%	4.96%
ALLY	68 Neutral	$12.41B	29.70	3.84%	2.91%	-2.99%	-43.64%
OMF	68 Neutral	$7.11B	12.65	17.46%	6.96%	9.07%	―
SOFI	67 Neutral	$21.27B	45.72	7.51%	―	21.24%	―
SOFI	67 Neutral	$21.27B	45.72	7.51%	―	21.24%	―
Sector *	67 Neutral	¥715.03B	10.81	7.51%	3.34%	7.81%	14.70%
SLM	60 Neutral	$7.22B	12.39	27.60%	1.53%	-0.70%	-12.72%
SLM	60 Neutral	$7.22B	12.39	27.60%	1.53%	-0.70%	-12.72%
CACC	57 Neutral	$6.17B	22.44	17.24%	―	13.77%	20.95%
CACC	57 Neutral	$6.17B	22.44	17.24%	―	13.77%	20.95%

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.