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GuruFocus Financial Strength Rank measures how strong a company’s financial situation is. It is based on these factors

1. The debt burden that the company has as measured by its Interest coverage (current year).
2. Debt to revenue ratio. The lower, the better
3. Altman Z-score.

A company ranks high with financial strength is likely to withstand any business slowdowns and recessions.

Financial Strength : 5/10

vs
industry
vs
history
Cash to Debt 0.08
ALFI's Cash to Debt is ranked lower than
51% of the 1570 Companies
in the Global Specialty Finance industry.

( Industry Median: 1.48 vs. ALFI: 0.08 )
ALFI' s 10-Year Cash to Debt Range
Min: 0.07   Max: No Debt
Current: 0.08

Equity to Asset 0.10
ALFI's Equity to Asset is ranked higher than
70% of the 2021 Companies
in the Global Specialty Finance industry.

( Industry Median: 0.09 vs. ALFI: 0.10 )
ALFI' s 10-Year Equity to Asset Range
Min: 0.09   Max: 0.13
Current: 0.1

0.09
0.13
Interest Coverage 0.11
ALFI's Interest Coverage is ranked lower than
53% of the 1845 Companies
in the Global Specialty Finance industry.

( Industry Median: 1.30 vs. ALFI: 0.11 )
ALFI' s 10-Year Interest Coverage Range
Min: 0.01   Max: 0.13
Current: 0.11

0.01
0.13
F-Score: 3
Z-Score: 0.12
GuruFocus Profitability Rank ranks how profitable a company is and how likely the company’s business will stay that way. It is based on these factors:

1. Operating Margin
2. Trend of the Operating Margin (5-year average). The company with an uptrend profit margin has a higher rank.
••3. Consistency of the profitability
4. Piotroski F-Score
5. Predictability Rank•

The maximum rank is 10. A rank of 7 or higher means a higher profitability and may stay that way. A rank of 3 or lower indicates that the company has had trouble to make a profit.

Profitability Rank is not directly related to the Financial Strength Rank. But if a company is consistently profitable, its financial strength will be stronger.

Profitability & Growth : 5/10

vs
industry
vs
history
Operating margin (%) 16.48
ALFI's Operating margin (%) is ranked higher than
58% of the 2032 Companies
in the Global Specialty Finance industry.

( Industry Median: 29.47 vs. ALFI: 16.48 )
ALFI' s 10-Year Operating margin (%) Range
Min: -15.41   Max: 14.9
Current: 16.48

-15.41
14.9
Net-margin (%) 15.65
ALFI's Net-margin (%) is ranked higher than
64% of the 2032 Companies
in the Global Specialty Finance industry.

( Industry Median: 21.42 vs. ALFI: 15.65 )
ALFI' s 10-Year Net-margin (%) Range
Min: -2.59   Max: 24.42
Current: 15.65

-2.59
24.42
ROE (%) 6.92
ALFI's ROE (%) is ranked higher than
69% of the 2042 Companies
in the Global Specialty Finance industry.

( Industry Median: 8.60 vs. ALFI: 6.92 )
ALFI' s 10-Year ROE (%) Range
Min: -0.79   Max: 6.09
Current: 6.92

-0.79
6.09
ROA (%) 0.72
ALFI's ROA (%) is ranked higher than
70% of the 2045 Companies
in the Global Specialty Finance industry.

( Industry Median: 0.80 vs. ALFI: 0.72 )
ALFI' s 10-Year ROA (%) Range
Min: -0.09   Max: 0.65
Current: 0.72

-0.09
0.65
ROC (Joel Greenblatt) (%) 177.33
ALFI's ROC (Joel Greenblatt) (%) is ranked higher than
88% of the 2013 Companies
in the Global Specialty Finance industry.

( Industry Median: 77.18 vs. ALFI: 177.33 )
ALFI' s 10-Year ROC (Joel Greenblatt) (%) Range
Min: 23.69   Max: 23.69
Current: 177.33

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Preferred stocks of Ally Financial Inc

SymbolPriceYieldDescription
ALFI1010.006.937 % Perp Pfd Shs Series -G- Reg-S
ALLYPRB0.007.99Fixed to Floating Rate Perp Pfd Shs Series -A-
GMSPZ0.000.007 % Perp Pfd Shs Series -G

Guru Investment Theses on Ally Financial Inc

Daniel Loeb Comments on Ally Financial - Jan 22, 2014

Third Point has invested across the capital structure of Ally Financial (ALFI), the former GMAC, throughout the company's multi-year reorganization. Today's Ally Financial ("Ally") fits the pattern of other profitable investments we have made: a highly successful, nearly-completed restructuring that remains undervalued, with an explosive earnings story led by a talented management team who are economically aligned with shareholders.

We invested initially in 2011 in Ally's unsecured debt and preferred securities because we believed market estimates of potential liabilities related to the company's w holly owned mortgage subsidiary, Rescap, were excessive. When Ally stopped funding its losses through direct loans and sought to distance itself from Rescap 's b allooning potential liabilities in 2012, Rescap filed Chapter 11. After nearly one year of creditor negotiations, Ally permanently settled all mortgage related liabilities for approximately $2 billion, a figure that was consistent with our expectations. During this period, Ally initiated a radical operational restructuring that included divesting all of its international operations and their associated $30 billion of assets and jettisoning Rescap, transforming Ally into a pure-play North American auto finance company with leading market share. 

Under normal conditions, a financial services company with $185 billion in assets undergoing a substantial restructuring would attract significant interest from investors. However, until November 2013, Ally remained 75% owned by the US government, under the terms of the Federal government bailout of General Motors during the financial crisis. With Ally's debt in struments trading above par following Rescap's bankruptcy filing , distressed players moved on to other opportunities and traditional equity investors dismissed the opportunity given the small float. Over the past six months, we have become one of Ally's largest shareholders, acquiring approximately 9.5% of the company in a series of private transactions.

Ally has announced a strategic plan to achieve increased profitability driven by improved cost of funding and balance sheet optimization, reduction in structural costs associated with divested international assets, and the easing of regulatory constraints still remaining due to the legacy Rescap relationship and government ownership. It has already begun reducing its high-cost funding structure through liability management, and recently received upgrades from S&P, Moody's , and Fitch, putting most of its debt instruments within striking distance of investment grade. The $1.3 billion primary capital raise in Q3 has strengthened Ally's capital metrics and should allow for greater future regulatory flexibility, mainly via increased funding from its rapidly growing online bank which has more than $50 billion in deposits. Last week's successful placement reduced the governmen t's holdings to 37 %. Finally, Ally recently received Fed approval for its Financial Holding Company application, a designation that will allow it to keep its competitive advantage of serving as a "one stop shop" for auto dealers providing retail and wholesale financing, insurance, and auction services.

Our confidence in Ally's ability to execute on its ambitious restructuring plan is driven by the leadership of Mike Carpenter, its talented CEO, and the company's deep management bench. In the last 12 months, Mr. Carpenter has guided Ally through one of the largest and fastest restructurings we have witnessed. Divesting $30 billion of assets on four continents and resolving a highly complex bankruptcy of a subsidiary are only the beginning of the story from this team, and we expect them to execute on their multi-year plan to significantly increase All y's earnings. Nearer-term, we believe Ally will be in a position to exit TARP with full government repayment during 2014, most likely through an IPO. Ally's underlying assets are low risk, with normalized credit losses of ~50bps and peak losses during the crisis of only ~100bps. The assets are short duration, typically 2½ to 3 years, resulting in a balance sheet that can quickly benefit from rising rates. These factors have led both debt and equity investors historically to apply low cost of capital requirements to securities backed by auto loans. We believe Ally is poised to grow its capital base and ultimately achieve a multiple significantly in excess of 1.0x book value, well above the valuation of our purchase levels.

From Daniel Loeb (Trades, Portfolio)'s Third Point fourth quarter 2013 commentary.

Check out Daniel Loeb latest stock trades

Top Ranked Articles about Ally Financial Inc

Daniel Loeb Comments on Ally Financial
Third Point has invested across the capital structure of Ally Financial (ALFI), the former GMAC, throughout the company's multi-year reorganization. Today's Ally Financial ("Ally") fits the pattern of other profitable investments we have made: a highly successful, nearly-completed restructuring that remains undervalued, with an explosive earnings story led by a talented management team who are economically aligned with shareholders. Read more...

Ratios

vs
industry
vs
history
P/E(ttm) 28.00
ALFI's P/E(ttm) is ranked higher than
67% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 18.00 vs. ALFI: 28.00 )
ALFI' s 10-Year P/E(ttm) Range
Min: 25.11   Max: 30.02
Current: 28

25.11
30.02
P/B 0.80
ALFI's P/B is ranked higher than
89% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 1.33 vs. ALFI: 0.80 )
ALFI' s 10-Year P/B Range
Min: 0.72   Max: 1.01
Current: 0.8

0.72
1.01
P/S 1.59
ALFI's P/S is ranked higher than
92% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 3.59 vs. ALFI: 1.59 )
ALFI' s 10-Year P/S Range
Min: 1.43   Max: 1.88
Current: 1.59

1.43
1.88
EV-to-EBIT 69.90
ALFI's EV-to-EBIT is ranked higher than
59% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 19.57 vs. ALFI: 69.90 )
ALFI' s 10-Year EV-to-EBIT Range
Min: 68.9   Max: 114.9
Current: 69.9

68.9
114.9

Dividend & Buy Back

vs
industry
vs
history
Dividend Yield 6.93
ALFI's Dividend Yield is ranked lower than
92% of the 1880 Companies
in the Global Specialty Finance industry.

( Industry Median: 2.31 vs. ALFI: 6.93 )
ALFI' s 10-Year Dividend Yield Range
Min: 0   Max: 0
Current: 6.93

Yield on cost (5-Year) 6.93
ALFI's Yield on cost (5-Year) is ranked lower than
92% of the 1893 Companies
in the Global Specialty Finance industry.

( Industry Median: 2.58 vs. ALFI: 6.93 )
ALFI' s 10-Year Yield on cost (5-Year) Range
Min: 0   Max: 0
Current: 6.93

Valuation & Return

vs
industry
vs
history
Price/Tangible Book 0.80
ALFI's Price/Tangible Book is ranked higher than
91% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 1.60 vs. ALFI: 0.80 )
ALFI' s 10-Year Price/Tangible Book Range
Min: 0.81   Max: 1.01
Current: 0.8

0.81
1.01
Price/Median PS Value 0.98
ALFI's Price/Median PS Value is ranked higher than
87% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 1.22 vs. ALFI: 0.98 )
ALFI' s 10-Year Price/Median PS Value Range
Min: 0.99   Max: 1.16
Current: 0.98

0.99
1.16
Price/Graham Number 0.66
ALFI's Price/Graham Number is ranked higher than
90% of the 2646 Companies
in the Global Specialty Finance industry.

( Industry Median: 1.18 vs. ALFI: 0.66 )
ALFI' s 10-Year Price/Graham Number Range
Min: 0.66   Max: 1
Current: 0.66

0.66
1
Earnings Yield (Greenblatt) 1.40
ALFI's Earnings Yield (Greenblatt) is ranked higher than
54% of the 2006 Companies
in the Global Specialty Finance industry.

( Industry Median: 6.60 vs. ALFI: 1.40 )
ALFI' s 10-Year Earnings Yield (Greenblatt) Range
Min: 0.9   Max: 1.5
Current: 1.4

0.9
1.5

Business Description

Industry: Banks » Specialty Finance
Compare: » details
Traded in other countries:ALLY.USA, GMZ.Germany,
Ally Financial Inc was founded in 1919. The Company is an independent, automotive financial services firm. The Company is engaged in Dealer Financial Services and Mortgage, Corporate and Other business. Dealer Financial Services includes its Automotive Finance operations and Insurance operations. Its primary customers are automotive dealers, which are typically independently owned businesses. Dealer Financial Services operations offer financial services and insurance products to approximately 16,000 automotive dealerships and approximately 4 million of their retail customers. Automotive Finance operations consist of automotive finance business generated in the United States. The commercial automotive financing operations fund dealer inventory purchases of new and used vehicles, commonly referred to as wholesale or floorplan financing. Its Insurance operations offer both consumer finance protection and insurance products sold through the automotive dealer channel, and commercial insurance products sold directly to dealers. It offers dealers consumer financial and insurance products, it provides vehicle service contracts, maintenance coverage, and GAP products. The vehicle service contracts for retail customers offer owners and lessees mechanical repair protection and roadside assistance for new and used vehicles beyond the manufacturer's new vehicle warranty. Consumer mortgage consists of first mortgage, subordinate-lien mortgages and home equity loans. Commercial & industrial mortgage consists of warehouse lending. Corporate and Other consists of its Commercial Finance Group, its centralized corporate treasury activities, such as management of the cash and corporate investment securities portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, the amortization of the discount associated with debt issuance and bond exchanges, and the residual impacts of its corporate funds-transfer pricing (FTP) and treasury asset liability management (ALM) activities. Ally Bank, a banking subsidiary of Company, raises deposits directly from customers through direct banking via the internet, telephone, mobile, and mail channels. It offers deposit product offerings including savings and money market accounts, certificates of deposit, interest-bearing checking accounts, trust accounts, and individual retirement accounts. The insurance business faces competition from automotive manufacturers, insurance carriers, third-party administrators, brokers, and other insurance-related companies. Ally Bank faces significant competition from commercial banks, savings institutions, and other financial institutions. The Company is subject to various regulatory, financial, and other requirements of the jurisdictions in which its businesses operate.

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