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5 Reasons to Add Ally Financial Stock to Your Portfolio Now
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At a time when finance sector stocks are showing resilience and confronting the macro issues upfront, we thought of bringing up a stock from the sector that reflects strong fundamentals, upbeat outlook and solid long-term growth opportunity.
Ally Financial Inc. (ALLY - Free Report) is a diversified financial services company, with a market capitalization of $9.3 billion. This Zacks Rank #2 (Buy) stock has been witnessing upward estimate revisions for 2016 and 2017, indicating analysts’ optimism about its growth prospects. Over the last 60 days, the Zacks Consensus Estimate for both 2016 and 2017 has inched up nearly 1% to $2.24 and $2.57, respectively.
Further, Ally Financial has a number of other aspects that make it an attractive investment option.
Revenue Strength: Ally Financial’s revenues have increased at a compounded annual growth rate (“CAGR”) of 9.3% over the last five years (2011–2015). This is backed by strong improvement in net financing revenue with CAGR of 34.9% over the same time frame.
Additionally, the company’s projected sales growth (F1/F0) of 10.2%, compared with the industry average of 3.9%, ensures continuation of the upward revenue trend.
Earnings Growth: Ally Financial has come a long way from recording an adjusted loss in 2013 to reporting adjusted earnings of $2.00 per share in 2015. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth (F1/F0) of 12.1%.
Also, the company’s long-term (3–5 years) estimated EPS growth rate of 7.5% promises rewards for investors in the long run.
Initiating Capital Deployment: Given the balance sheet restructuring initiatives and repayment of the Troubled Asset Relief Program (TARP) in Dec 2014, Ally Financial’s 2016 capital plan was approved by the Federal Reserve. Subsequently, the company announced a $700-million share repurchase program and paid its first quarterly dividend of 8 cents per share. Notably, based on last day’s closing price of $19.13 per share, the company’s current dividend yield is 1.67%.
Strong VGM Score: Ally Financial has a VGM Score of ‘A’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Rising Share Price: Over the last three months, Ally Financial’s share price has witnessed an uptrend, surging approximately 17%.
Stocks to Consider
Other finance stocks worth a look include Credit Acceptance Corp. (CACC - Free Report) , Synovus Financial Corporation (SNV - Free Report) and BlackRock, Inc. (BLK - Free Report) . All three stocks sport the same Zacks Rank as Ally Financial.
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5 Reasons to Add Ally Financial Stock to Your Portfolio Now
At a time when finance sector stocks are showing resilience and confronting the macro issues upfront, we thought of bringing up a stock from the sector that reflects strong fundamentals, upbeat outlook and solid long-term growth opportunity.
Ally Financial Inc. (ALLY - Free Report) is a diversified financial services company, with a market capitalization of $9.3 billion. This Zacks Rank #2 (Buy) stock has been witnessing upward estimate revisions for 2016 and 2017, indicating analysts’ optimism about its growth prospects. Over the last 60 days, the Zacks Consensus Estimate for both 2016 and 2017 has inched up nearly 1% to $2.24 and $2.57, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Moreover, Ally Financial has an impressive earnings surprise history. You can see that in the chart below:
ALLY FINANCIAL Price and Consensus
ALLY FINANCIAL Price and Consensus | ALLY FINANCIAL Quote
Further, Ally Financial has a number of other aspects that make it an attractive investment option.
Revenue Strength: Ally Financial’s revenues have increased at a compounded annual growth rate (“CAGR”) of 9.3% over the last five years (2011–2015). This is backed by strong improvement in net financing revenue with CAGR of 34.9% over the same time frame.
Additionally, the company’s projected sales growth (F1/F0) of 10.2%, compared with the industry average of 3.9%, ensures continuation of the upward revenue trend.
Earnings Growth: Ally Financial has come a long way from recording an adjusted loss in 2013 to reporting adjusted earnings of $2.00 per share in 2015. This earnings momentum is likely to continue in the near term as reflected by the company’s projected EPS growth (F1/F0) of 12.1%.
Also, the company’s long-term (3–5 years) estimated EPS growth rate of 7.5% promises rewards for investors in the long run.
Initiating Capital Deployment: Given the balance sheet restructuring initiatives and repayment of the Troubled Asset Relief Program (TARP) in Dec 2014, Ally Financial’s 2016 capital plan was approved by the Federal Reserve. Subsequently, the company announced a $700-million share repurchase program and paid its first quarterly dividend of 8 cents per share. Notably, based on last day’s closing price of $19.13 per share, the company’s current dividend yield is 1.67%.
Strong VGM Score: Ally Financial has a VGM Score of ‘A’. Our research shows that stocks with a VGM Score of ‘A’ or ‘B’, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Rising Share Price: Over the last three months, Ally Financial’s share price has witnessed an uptrend, surging approximately 17%.
Stocks to Consider
Other finance stocks worth a look include Credit Acceptance Corp. (CACC - Free Report) , Synovus Financial Corporation (SNV - Free Report) and BlackRock, Inc. (BLK - Free Report) . All three stocks sport the same Zacks Rank as Ally Financial.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>