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What's in the Cards for Ally Financial (ALLY) in Q1 Earnings?

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Ally Financial Inc. ALLY is slated to report first-quarter 2021 results on Apr 16, before the opening bell. Its earnings and revenues are expected to have increased on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from growth in revenues and lower provisions, partly offset by rise in expenses.

Notably, Ally Financial has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 50.3%.

Ally Financial Inc. Price and EPS Surprise

Ally Financial Inc. Price and EPS Surprise

Ally Financial Inc. price-eps-surprise | Ally Financial Inc. Quote

 

Key Estimates for Q1

The Zacks Consensus Estimate for interest and fees on finance receivables and loans is pegged at $1.64 billion, indicating a rise of 1.9% from the previous quarter’s reported number. The impressive numbers reflect a gradual rise in demand for consumer loans.

The consensus estimate for interest on loans held for sale is pegged at $6 million, on par with the prior quarter.

Driven by an expected increase in interest and fees on finance receivables and loans (the major component of interest income), total financing revenues and other interest income are expected to have improved in the quarter. The consensus estimate for the same is pegged at $2.19 billion, suggesting 3.2% growth sequentially.

Looking at the fee income components, the consensus estimate for insurance premiums and service revenue earned of $283 million suggests a decline of 1.4% sequentially. Further, the Zacks Consensus Estimate for net other gain on investments is $54 million, indicating a 59.7% fall. Also, the consensus estimate for net other income of $96 million suggests a 58.8% decline.

Thus, due to a decline in almost all fee income components, total non-interest income is expected to have fallen in the quarter. The Zacks Consensus Estimate for total other revenues is pegged at $438 million, reflecting a decline of 35.4% sequentially.

Notably, Ally Financial has been witnessing a persistent rise in expenses over the past several quarters. As it launches new products and seeks to expand into newer areas of operations, overall costs are likely to have remained elevated in the first quarter.

Earnings Whispers

Our proven model shows that Ally Financial has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat this time around.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Ally Financial is +7.43%.

Zacks Rank: Ally Financial currently sports a Zacks Rank #1 (Strong Buy).

The Zacks Consensus Estimate for earnings of $1.13 has been revised 5.6% upward over the past seven days. Moreover, the figure indicates a rise of 356.8% from the year-ago quarter’s reported figure. Also, the consensus estimate for sales is pegged at $1.75 billion, implying a 24.3% increase.

Other Stocks That Warrant a Look

Here are some other finance stocks that you may want to consider, as according to our model, these have the right combination of elements to post an earnings beat in their upcoming releases.

BNY Mellon BK is slated to release earnings figures on Apr 16. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +1.27%.

BankUnited BKU is scheduled to release earnings on Apr 22. The company, which carries a Zacks Rank #3 at present, has an Earnings ESP of +0.64%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Earnings ESP for Invesco (IVZ - Free Report) is +1.21% and it carries a Zacks Rank #2 (Buy) at present. The company is slated to report quarterly numbers on Apr 27.

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