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Ally Financial (ALLY) Gains But Lags Market: What You Should Know

·3 min read

In the latest trading session, Ally Financial (ALLY) closed at $33.87, marking a +1.26% move from the previous day. This change lagged the S&P 500's 1.53% gain on the day. Elsewhere, the Dow gained 1.19%, while the tech-heavy Nasdaq added 0.14%.

Prior to today's trading, shares of the auto finance company and bank had lost 6.28% over the past month. This has lagged the Finance sector's loss of 1.54% and the S&P 500's loss of 3.1% in that time.

Investors will be hoping for strength from Ally Financial as it approaches its next earnings release. On that day, Ally Financial is projected to report earnings of $1.81 per share, which would represent a year-over-year decline of 16.2%. Meanwhile, our latest consensus estimate is calling for revenue of $2.17 billion, up 9.45% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.16 per share and revenue of $8.63 billion. These totals would mark changes of -16.84% and +5.2%, respectively, from last year.

Any recent changes to analyst estimates for Ally Financial should also be noted by investors. These revisions typically reflect the latest short-term business trends, which can change frequently. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Our research shows that these estimate changes are directly correlated with near-term stock prices. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.61% lower within the past month. Ally Financial is holding a Zacks Rank of #3 (Hold) right now.

Valuation is also important, so investors should note that Ally Financial has a Forward P/E ratio of 4.67 right now. For comparison, its industry has an average Forward P/E of 5.88, which means Ally Financial is trading at a discount to the group.

It is also worth noting that ALLY currently has a PEG ratio of 0.15. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. The Financial - Consumer Loans industry currently had an average PEG ratio of 0.27 as of yesterday's close.

The Financial - Consumer Loans industry is part of the Finance sector. This industry currently has a Zacks Industry Rank of 164, which puts it in the bottom 35% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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