Zacks Investment Research


The Zacks Finance sector has primarily traded in line with the general market in 2022, down roughly 20%.

A widely-recognized company in the sector, Ally Financial ALLY, is on deck to unveil Q3 earnings on October 19th, before the market open.

Ally Financial is a diversified financial services company providing a broad array of financial products and services, primarily to automotive dealers and their customers.

Currently, the financial titan carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of a C.

How are things shaping up heading into the print? Let’s take a closer look.

Share Performance & Valuation

Year-to-date, ALLY shares have undergone adverse price action, down well over 35% and widely lagging behind its Zacks Finance sector.

Image Source: Zacks Investment Research

Over the last three months, shares have had little room to breathe, down 12% and lagging behind its Zacks Sector’s performance in this timeframe also.

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Image Source: Zacks Investment Research

ALLY’s 4.1X forward earnings multiple is tiny, nearly half its 8.3X five-year median and representing a sizable 70% discount relative to its Zacks Finance sector.

Further, the company sports a Style Score of an A for Value.

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Image Source: Zacks Investment Research

Quarterly Estimates

Analysts have been bearish in their earnings outlook, with four negative earnings estimate revisions coming in over the last several months. The Zacks Consensus EPS Estimate of $1.75 suggests a Y/Y decline in earnings of roughly 19%.

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Image Source: Zacks Investment Research

However, the company’s top-line is in much better shape; the Zacks Consensus Sales Estimate of $2.2 billion reflects a strong 8.5% uptick from year-ago sales of $2 billion.

Quarterly Performance & Market Reactions

Ally Financial has primarily exceeded earnings estimates, penciling in eight EPS beats across its last ten quarters. Still, in its latest print, the company posted a 7.4% bottom-line miss.

Revenue results have left some to be desired as of late, with the company registering just one top-line beat over its last four quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

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Image Source: Zacks Investment Research

In addition, it’s worth noting that shares have moved downward following each of the company’s last four quarterly prints.

Putting Everything Together

ALLY shares have lagged behind the Zacks Finance sector across multiple timeframes in 2022, indicating that sellers have remained in control.

The company’s valuation multiples are undoubtedly low, with its forward P/E ratio sitting well beneath the five-year median and Zacks Finance sector average.

Analysts have been bearish for the quarter over the last several months, with estimates suggesting a decrease in earnings but a solid uptick in revenue.

ALLY has consistently exceeded bottom-line expectations, but revenue results have been a bit lackluster as of late.

Heading into the print, Ally Financial ALLY carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -0.1%. 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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