Key Statistics Ticker Symbol= ALLY Share Price= $43.80 Market Cap= $14.8B 2021 GAAP EPS= $8.22 Earnings Yield= 18.76% Forward Earnings Yield=15% Tangible Book Value Per Share = $38.73 Target Forward ROE = 16-18% Dividend Yield = 2.73% Ally Financial Inc. (ALLY) is in an extremely strong competitive and strategic position in the U.S. banking sector. The company benefits from a lower cost profile due to being branchless, which greatly reduces the overhead burden of the legacy consumer banking franchises. Ally emerged from GM Financial when that company went into bankruptcy during the Financial Crisis. Auto Finance is still the biggest business for Ally, which is attractive in that the lending is secured, and when defaults do occur, the asset is typically repossessed in a timely manner, reducing losses. Ally appeals to a younger demographic that does most business online. The company has diversified into investments, insurance, mortgages and now credit cards. Ally’s financial profile became dramatically stronger over the last decade due to its ability to use low-cost retail deposits to fund its business, rather than expensive secured and unsecured debt sources that the company relied on prior to becoming a bank. Since 2014, the bank has doubled low-cost retail deposits, while retiring $24 billion of legacy and secured debt with a weighted average coupon of over 5%. Ally is an undervalued stock with strong long-term upside, and we are going to recommend a trading strategy to take advantage of the current volatility in the stock.
ALLY Financial
ALLY Financial
ALLY Financial
Key Statistics Ticker Symbol= ALLY Share Price= $43.80 Market Cap= $14.8B 2021 GAAP EPS= $8.22 Earnings Yield= 18.76% Forward Earnings Yield=15% Tangible Book Value Per Share = $38.73 Target Forward ROE = 16-18% Dividend Yield = 2.73% Ally Financial Inc. (ALLY) is in an extremely strong competitive and strategic position in the U.S. banking sector. The company benefits from a lower cost profile due to being branchless, which greatly reduces the overhead burden of the legacy consumer banking franchises. Ally emerged from GM Financial when that company went into bankruptcy during the Financial Crisis. Auto Finance is still the biggest business for Ally, which is attractive in that the lending is secured, and when defaults do occur, the asset is typically repossessed in a timely manner, reducing losses. Ally appeals to a younger demographic that does most business online. The company has diversified into investments, insurance, mortgages and now credit cards. Ally’s financial profile became dramatically stronger over the last decade due to its ability to use low-cost retail deposits to fund its business, rather than expensive secured and unsecured debt sources that the company relied on prior to becoming a bank. Since 2014, the bank has doubled low-cost retail deposits, while retiring $24 billion of legacy and secured debt with a weighted average coupon of over 5%. Ally is an undervalued stock with strong long-term upside, and we are going to recommend a trading strategy to take advantage of the current volatility in the stock.