Analysis of Ally Financials Inc. Stock

I recently started purchasing shares of Ally Financials Inc. The stock has been on my radar for awhile now, and I plan to acquire more shares of this company over a longer period. Ally Financials is a digital financial services company most famous for its banking services. It’s a completely digital bank which is great because it doesn’t have to deal with the cost of brick and mortar locations. From the research that I have done on them, I can confidently say that it does a really good job as a bank. In this article, I want to look at the stock and give my analysis of the company.

The first thing I noticed when looking at this company is their price/earnings ratio (p/e ratio). They have a p/e ratio of 4.37 at time of writing. They’re a bank stock so I expected a low p/e ratio but 4.37 is, in my opinion, extremely low. They currently have a market cap of $7.82 billion. The company also offers a dividend yield of 4.44%. 

When looking at their revenue and earnings over the last few years, one will see that in 2021, Ally brough in $8.67 billion in revenue and made $3.06 billion off of that. In 2020, they brough in $6.2 billion in revenue and made $1.08 billion. In 2019, they made $6.38 billion in revenue and made $1.72 billion off of that. One can see a decline in both revenue and profits from 2019-2020 which investors should notice. 

I bought stock in Ally financials because I believe that they have a lot of growth potential. I am very bullish on online banking and believe it has a lot of potential. While I can see Ally having some short term struggles (and I hope it does so I can buy shares at a cheaper price), I do see a big opportunity for long-term growth. I think that Ally Financials is in a good position to capitalize on this in the long-term. 

While I do believe this is a good investment for me to make, I don’t necessarily believe that this is a good investment for everyone. My hope is that this article will help one better make that decision for themselves.

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