Shares of Ally Financial (NYSE:ALLY) were largely unchanged as Truist Securities reiterated its Buy recommendation with a price target set at $51. According to data from InvestingPro, analyst price targets for Ally range widely from $46 to $70, positioning the consensus estimate for the stock at a potential 24% gain relative to current levels.
In its forward-looking statements, Ally Financial projected a net interest margin (NIM) for the upcoming year between 3.6% and 3.7%. This outlook fell slightly below the consensus forecast of 3.74%, indicating tempered expectations on interest income trends. The company also issued guidance for retail auto net charge-offs in the range of 1.8% to 2.0%, marking only a marginal improvement compared to the prior year’s 1.97% figure.
This guidance followed the year-end report showing a 21 basis point reduction in delinquencies, which Truist Securities characterized as a point of contention among investors. The firm described this as sparking a "bull/bear debate," with some viewing the projections as a reflection of toned-down expectations, while others interpret the conservative tone as a possible setup for performance surpassing targets.
Currently, Ally Financial’s stock trades around $42 per share, slightly above its tangible book value, which recently crossed the $40 mark and is forecasted to grow. Its current Price to Book (P/B) ratio stands at approximately 1.01, representing equilibrium between stock price and underlying book value.
The company has demonstrated profitability with an 11% to 12% return on tangible common equity (RoTCE). Complementary data from InvestingPro shows a 6% return on common equity across the last twelve months. Management continues to aim for mid-teens returns over the long term, although insights from the recent earnings call suggest investors should regard the earnings guidance as straightforward rather than conservative.
Ally’s dividend yield is currently at 2.83%, supported by a consistent streak of dividend payments sustained for 11 years. According to InvestingPro analysis, Ally’s shares are trading below their Fair Value estimate, underscoring potential undervaluation. For detailed financial insights, investors can consult the Pro Research Report, which delivers in-depth expert evaluations of key performance factors for this financial services provider.
Adding to recent news, Ally Financial announced its 2025 fourth-quarter results, exceeding expectations with adjusted earnings per share (EPS) of $1.09, outpacing the forecasted $1.03 consensus. This 5.83% earnings surprise was largely driven by increased other revenue, which helped offset a slight decline in net interest income.
Despite the positive earnings beat, Ally’s shares dipped in pre-market trading, reflecting investor caution tied to the forward guidance and broader market dynamics. Supporting the positive analyst outlook, TD Cowen reaffirmed its Buy rating on Ally and elevated the price target to $55, emphasizing sustained interest and scrutiny from market participants navigating the company's performance and outlook.