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Ally Financial (ALLY)
NYSE:ALLY
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Ally Financial
(NYSE:ALLY)
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Rating:67Neutral
Price Target:
$45.00
▼(-1.98% Downside)
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
$14.08B
Dividend Yield2.58%
Average Volume (3M)2.60M
Price to Earnings (P/E)27.5
Beta (1Y)1.08
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. Volume2,019,219
30 Day Avg. Volume2,601,632
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 Cap1.60
Enterprise Value/Revenue1.47
Enterprise Value/Gross Profit3.18
Enterprise Value/Ebitda11.14
Forecast
1Y Price Target
$53.71Price Target Upside17.00% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering15
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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:Oct 17, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Jan 21, 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's financial performance is stable but cautious. The income statement shows a slight decline in revenue growth and low net profit margins. The balance sheet indicates high leverage with a debt-to-equity ratio of 1.36, and the cash flow analysis reveals negative free cash flow, suggesting potential financial risks.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.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.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.| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 15.29B | 16.37B | 15.97B | 12.10B | 10.69B | 10.72B |
| Gross Profit | 7.10B | 6.73B | 7.10B | 7.84B | 8.54B | 6.04B |
| EBITDA | 2.02B | 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 | 29.23B | 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
Neutral
45.91
Price Trends
42.47
Positive
41.45
Positive
38.54
Positive
Market Momentum
0.84
Positive
47.34
Neutral
28.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ALLY, the sentiment is Neutral. The current price of 45.91 is above the 20-day moving average (MA) of 45.71, above the 50-day MA of 42.47, and above the 200-day MA of 38.54, indicating a neutral trend. The MACD of 0.84 indicates Positive momentum. The RSI at 47.34 is Neutral, neither overbought nor oversold. The STOCH value of 28.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 | $8.34B | 12.03 | 21.41% | 6.07% | 9.51% | 29.38% | |
72 Outperform | $31.30B | 9.50 | 21.64% | 1.34% | -6.38% | 19.65% | |
71 Outperform | $4.00B | 14.54 | 23.81% | ― | 21.10% | 76.12% | |
68 Neutral | $5.25B | 12.34 | 28.14% | ― | 10.30% | 154.64% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $14.08B | 27.53 | 4.25% | 2.58% | -6.89% | -33.20% | |
67 Neutral | $5.61B | 9.73 | 27.85% | 1.88% | 0.59% | -1.11% |
* Financial Sector Average
ALLY
Ally Financial
44.37
10.18
29.77%
CACC
Credit Acceptance
466.01
4.03
0.87%
SLM
SLM
26.72
-0.44
-1.63%
SYF
Synchrony Financial
79.63
14.73
22.70%
OMF
OneMain Holdings
66.59
17.01
34.31%
ENVA
Enova International
158.24
56.75
55.92%
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.