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Why Is Ally Financial (ALLY) Down 5.2% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Ally Financial Inc. (ALLY - Free Report) . Shares have lost about 5.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ally Financials Q1 Earnings Lag on Higher Expenses
Ally Financial’s first-quarter 2017 adjusted earnings of $0.48 per share lagged the Zacks Consensus Estimate of $0.49. Also, the figure declined 7.7% from the prior-year quarter.
Escalated expenses and higher provisions were primarily responsible for the lower-than-expected results. Moreover, capital ratios deteriorated during the quarter. However, higher net revenues supported results to some extent.
Net income available to common shareholders (GAAP basis) was $214 million, down 8.9% from the prior-year quarter.
Revenues & Expenses Increased
Total net revenue for the quarter increased nearly 3.6% year over year to $1.38 billion, owing to a rise in total other revenue as well as net financing revenue. However, the reported figure was a shade below the Zacks Consensus Estimate of $1.39 billion.
Total non-interest expenses increased 9.6% year over year to $778 million. The rise was due to an increase in all expense components.
Credit Quality Deteriorates
Non-performing loans of $798 million were up 14.3% year over year. Moreover, provision for loan losses increased 23.2% year over year to $271 million.
Balance Sheet Strengthens, Capital Ratios Deteriorate
Total finance receivables and loans amounted to $117.85 billion as of Mar 31, 2017, compared with $117.80 billion as of Dec 31, 2016. Further, deposits totaled $84.49 billion, up from $79.02 billion as of Dec 31, 2016.
As of Mar 31, 2017, total capital ratio came in at 12.7%, down from 13.0% at the end of the prior-year quarter. Tier I capital ratio was 11.1%, compared with 11.6% as of Mar 31, 2016.
Share Repurchases
During the quarter, the company repurchased shares worth $169 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
At this time, the stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is Ally Financial (ALLY) Down 5.2% Since the Last Earnings Report?
It has been about a month since the last earnings report for Ally Financial Inc. (ALLY - Free Report) . Shares have lost about 5.2% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Ally Financials Q1 Earnings Lag on Higher Expenses
Ally Financial’s first-quarter 2017 adjusted earnings of $0.48 per share lagged the Zacks Consensus Estimate of $0.49. Also, the figure declined 7.7% from the prior-year quarter.
Escalated expenses and higher provisions were primarily responsible for the lower-than-expected results. Moreover, capital ratios deteriorated during the quarter. However, higher net revenues supported results to some extent.
Net income available to common shareholders (GAAP basis) was $214 million, down 8.9% from the prior-year quarter.
Revenues & Expenses Increased
Total net revenue for the quarter increased nearly 3.6% year over year to $1.38 billion, owing to a rise in total other revenue as well as net financing revenue. However, the reported figure was a shade below the Zacks Consensus Estimate of $1.39 billion.
Total non-interest expenses increased 9.6% year over year to $778 million. The rise was due to an increase in all expense components.
Credit Quality Deteriorates
Non-performing loans of $798 million were up 14.3% year over year. Moreover, provision for loan losses increased 23.2% year over year to $271 million.
Balance Sheet Strengthens, Capital Ratios Deteriorate
Total finance receivables and loans amounted to $117.85 billion as of Mar 31, 2017, compared with $117.80 billion as of Dec 31, 2016. Further, deposits totaled $84.49 billion, up from $79.02 billion as of Dec 31, 2016.
As of Mar 31, 2017, total capital ratio came in at 12.7%, down from 13.0% at the end of the prior-year quarter. Tier I capital ratio was 11.1%, compared with 11.6% as of Mar 31, 2016.
Share Repurchases
During the quarter, the company repurchased shares worth $169 million.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There has been one revision lower for the current quarter.
Ally Financial Inc. Price and Consensus
Ally Financial Inc. Price and Consensus | Ally Financial Inc. Quote
VGM Scores
At this time, the stock has a subpar Growth Score of 'D', though it is lagging a bit on the momentum front with an 'F'. However, the stock was allocated a grade of 'A' on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of this revision also indicates a downward shift. Notably, the stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.