EU and US could reach trade deal this weekend - Reuters
On Tuesday, Barclays (LON:BARC) analyst Jason Goldberg maintained an Equalweight rating and a $44.00 price target on Ally Financial (NYSE: NYSE:ALLY), with the stock currently trading at $33.02. The broader analyst consensus shows targets ranging from $30 to $56, reflecting mixed sentiment about the company’s prospects. According to InvestingPro data, 11 analysts have recently revised their earnings expectations downward. Goldberg highlighted the potential risks posed by ongoing and escalating tariffs and trade restrictions, particularly in how they may affect the automobile industry and related sectors. These trade issues could contribute to volatility in financial markets, potentially impacting economic conditions, automobile sales, consumer purchasing power, customer creditworthiness, and Ally Financial’s expected financial results. The company maintains a Fair Value rating from InvestingPro, with a beta of 1.13 indicating moderate market sensitivity. Despite challenges, Ally Financial offers a 3.63% dividend yield and has maintained dividend payments for 10 consecutive years.
Ally Financial has navigated changes in U.S. trade policies, which have introduced additional uncertainty into the market. With a market capitalization of $10.14 billion and a P/E ratio of 53.5, the company’s valuation reflects these challenges. The trade tensions have raised concerns about inflation and global trade, which could have downstream effects on new and used automobile sales, a sector closely tied to Ally Financial’s performance. For deeper insights into Ally Financial’s fundamentals and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed Research Reports, available for over 1,400 US stocks.
Regarding regulatory capital, Ally Financial delayed recognizing the estimated impact of the Current Expected Credit Losses (CECL) on regulatory capital after a two-year deferral period ending December 31, 2021. Starting on January 1, 2022, the company began phasing in 25% of the previously deferred estimated capital impact of CECL annually. As of January 1, 2025, the estimated impact on Ally Financial’s Common Equity Tier 1 (CET1) was fully phased in, resulting in a 19 basis points hit.
In a strategic move, Ally Financial completed the sale of its Ally Credit Card on April 1, 2025. The assets and liabilities of the credit card division were transferred to operations held-for-sale on the balance sheet, and the related operating results have been reported within continuing operations for all periods presented.
Lastly, Ally Financial announced in the first quarter of 2025 that it will discontinue accepting mortgage applications after January 31, 2025. The cessation of consumer mortgage originations is expected to occur during the second quarter of 2025, leading to a gradual runoff of the remaining consumer mortgage loan portfolio. This decision forms part of the company’s broader strategy to streamline its operations and focus on its core business areas.
In other recent news, Ally Financial Inc. reported its first-quarter earnings for 2025, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $0.58, exceeding the forecasted $0.47. The company also reported adjusted net revenue of $2.1 billion, which was higher than the anticipated $2.03 billion. Additionally, Ally Financial completed the sale of its credit card business, allowing the company to focus on its core operations such as auto lending and digital banking. Record auto loan applications and increased digital banking engagement were highlighted as significant developments.
In another development, Truist Securities revised its price target for Ally Financial to $41.00 from the previous $45.00 while maintaining a Buy rating on the stock. The revision incorporated the actual securities loss realized in the first quarter into the earnings estimates, affecting the EPS projections for 2025 and 2026. Despite the lowered price target, Truist Securities expressed optimism about Ally’s future, citing potential improvements in retail auto credit, margin expansion, and growth in tangible book value.
These recent developments reflect Ally Financial’s strategic focus and robust financial performance, which have garnered positive attention from investors and analysts alike.
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