Ally Financial Inc. (ALLY) stock analysis

P/E below its 5-year median

Ally Financial's P/E of 8.8 is below its own 5-year median of 10.4.

P/E below the industry

Ally Financial's P/E of 8.8 is below the Commercial Banks median of 12.1.

P/S below the industry

Ally Financial's price-to-sales of 1.32 is below the Commercial Banks median of 3.60.

P/B below the industry

Ally Financial's price-to-book of 0.78 is below the Commercial Banks median of 1.29.

Trading below fair value

The share price of $38.27 is below our fair value estimate of $50.09.

Margin of safety over 20%

The price is 23.6% below fair value, more than the 20% cushion we look for.

Revenue growing under 10% a year

Revenue grew -2.1% a year over the last three fiscal years, short of the 10% we look for.

EPS growing under 10% a year

Diluted EPS grew -22.2% a year over the last three fiscal years.

Earnings growth accelerating

Net income grew 135% over the last twelve months, against a 5-year average of -4.7% a year.

Growing faster than the industry

Revenue grew 13.1% over the last twelve months; the Commercial Banks median is 11.3%.

Company guidance

No outlook found in earnings releases from the last twelve months.

Gross margin trend

Banks and insurers do not report gross profit.

Return on equity under 15%

Return on equity was 9.9% over the last twelve months and averaged 9.7% over five years; we look for 15% on both.

Return on assets under 1%

Return on assets was 0.8%; for a bank or insurer, 1% or more is considered good.

Return on equity below the industry

Ally Financial's return on equity of 9.9% is below the Commercial Banks median of 11.5%.

Earnings shrank over 5 years

Net income shrank 4.7% a year on average over the last five fiscal years.

Net margin below its 5-year average

Net margin was 16.8% over the last twelve months, against a 5-year average of 17.6%.

Net margin below the industry

Ally Financial's net margin of 16.8% is below the Commercial Banks median of 30.3%.

Thin capital

Equity is 7.4% of total assets; 8% or more is a comfortable cushion.

Loans funded by deposits

Loans equal 92.6% of deposits, so lending is funded by customer deposits.

Adequate loan-loss reserve

The allowance for credit losses is 2.6% of loans; we look for at least 1%.

Efficient operations

Needs non-interest expense and revenue.

Deposits growing

Deposits grew 5.0% over the past year.

Heavy borrowings

Borrowings other than deposits are 167% of equity.

Pays a dividend

Ally Financial paid dividends worth 2.4% of the share price over the last twelve months.

Yield below Treasuries

The 2.4% yield is below the 4.4% on a 1-year Treasury.

Yield below the top quarter

The top quarter of US dividend payers yield 3.8% or more; Ally Financial yields 2.4%.

Dividend not cut

The dividend per share has not fallen by more than 10% in any of the last 10 fiscal years.

Covered by earnings

Dividends take 25.5% of net income.

Cash-flow cover

Needs dividends paid and free cash flow.