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Ally Financial Q4 2019 Earnings – The Most Undervalued Bank in the U.S.?

Ally Financial (NYSE: ALLY) has released their Q4 2019 quarterly results as well as full-year earnings results for 2019. Revenue came exactly where analysts expected, and the company posted a small beat on EPS.

Revenue came in at $1.60 billion matching analysts’ expectations. EPS for the quarter was $0.95 which beat analysts’ expectations at $0.9344 (+1.66% vs estimates).

Ally offers a variety of financial services products in the United States, such as a high interest savings account and a stock brokerage service called Ally Invest, which came as a result of Ally’s acquisition of a brokerage firm called TradeKing back in 2016. This puts Ally in direct competition with other brokerages like Charles Schwab, TD Ameritrade, and Robinhood as well as traditional banks that compete with Ally’s core business of providing banking services.

Taking a quick look at Ally’s forward P/E ratio, we can see that it ranks the lowest among many of its peers.

Looking at revenue growth, the company ranks around the middle of the road among bigger U.S. banks.

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One big area of concern with Ally is the high amount of debt the company has versus its cash balance. As of January 2020, the company reported to have $41.26 billion in total debt and only $3.71 billion in cash with a current ratio coming in at 0.87.

Overall though, Ally has performed well throughout the past year. The company has consistently beat EPS estimates for the past 2 years and recently declared a dividend raise from $0.17 per share to $0.19 per share (+11.8%).

The stock has increased a decent amount in the past year, although not as much as some of its peers like Chase Bank and Citigroup. The question still remains if Ally is undervalued at its current levels.

 

The opinions provided in this article are those of the author and do not constitute investment advice. Readers should assume that the author and/or employees of Grizzle hold positions in the company or companies mentioned in the article. For more information, please see our Content Disclaimer.

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Categories: Investing
Andy Zhou: Andy Zhou graduated from the University of Waterloo in Ontario, Canada, in 2019 with an bachelor’s degree in mathematics (honors). Throughout his time at university, he took on various internships at many major Canadian companies, including the Royal Bank of Canada and Loblaw. In October 2016, he enrolled in the university’s official stock simulator game, StockTrak run by the Faculty of Mathematics. By the time of his graduation, Andy ranked fourth out of 535 participants, with a total portfolio net return of 98 percent. In the last year of university prior to his graduation, he founded and led the UW FIRE Club, where he led discussions and debates on all topics related to finance and investing.
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