ALLY - Ally Financial: Improving Credit Metrics But Caution Is Warranted
2024-06-30 05:49:23 ET
Summary
- Ally Financial is benefiting from an improving credit outlook due to a "soft landing" for the US economy.
- Expect further progress in credit performance in the upcoming Q2 earnings release.
- Potential disruption and increased competition in the auto financing market are medium-term risks.
Ally Financial ( ALLY ) is facing an improving credit outlook as a "soft landing" for the US economy looks increasingly likely. With a total return of 56% over the past 52 weeks, the auto lender’s stock has enjoyed a robust rally. It has even outperformed the 29% gain for the financial sector, and total returns over the same period of 29% and 42% for consumer lending peers Capital One Financial ( COF ) and Synchrony Financial ( SYF ), respectively.
Still, Ally hasn’t yet made back all of its losses from the 2022 slump, and the stock price remains 29% below its all-time high of $56.61, recorded on June 2, 2021. A big difference between then and now is that provisions for loan losses, although having started to decline, remain at a significantly elevated level when compared to the pandemic period....
Ally Financial: Improving Credit Metrics, But Caution Is Warranted