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Here's Why it's Wise to Hold Ally Financial (ALLY) Stock Now

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On Jun 7, 2017, we issued an updated research report on Ally Financial Inc. (ALLY - Free Report) . The company’s initiatives to diversify its revenue base are expected to support profitability in the quarters ahead. However, elevated expenses and higher debt levels remain major concerns.

Shares of the company have gained nearly 7.1% in the last one year, marginally underperforming the Zacks categorized Financial - Consumer Loans industry’s growth of 7.4%.

Looking at the estimate revision trend, the company’s current year earnings estimates have been marginally revised downward in the last 30 days. As a result, the stock currently carries just a Zacks Rank #3 (Hold).



Here are a few reasons why you should hold the stock:

The company has been making efforts to diversify its revenue sources by enhancing digital offerings and introducing new products. These efforts are expected to help in bottom-line growth.

Also, Ally Financial has been witnessing a persistent improvement in NIM. Margins are expected to continue improving, driven by the company’s efforts toward becoming a bank, the gradual improvement in rate scenario and rising loan demand.

Further, supported by a strong balance sheet position, the company is expected to continue its efficient capital deployment activities, which will enhance shareholder value.

However, increased expenses are a major concern. With the launch of new products and efforts to boost profitability, expenses are expected to rise in the coming quarters.

Also, the company uses high levels of debt to finance its operations. Higher debt levels could limit its flexibility and restrict it from procuring additional finance for working capital, capital expenditures, acquisitions or other purposes.

Stocks to Consider

Some better-ranked stocks in the finance space include Comerica Incorporated (CMA - Free Report) , Franklin Resources, Inc. (BEN - Free Report) and The PNC Financial Services Group, Inc. (PNC - Free Report) .

Comerica has witnessed an upward earnings estimate revision of 8.4% for the current year in the last 60 days. Its share price has risen 52% in the last one year. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Franklin Resources currently carries a Zacks Rank #2 (Buy). For the current fiscal year in the last 60 days, its Zacks Consensus Estimate has been revised 6.7% upward. Its share price has increased 23.5% in the last one year.

PNC Financial also carries a Zacks Rank #2. It has witnessed an upward earnings estimate revision of 2.6% for the current year in the last 60 days, while its share price is up 35.7% in the last one year.

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