WFC - Ally Financial: Potentially Undervalued And Benefits From Strong Auto Segment Growth

2024-02-26 02:27:31 ET

Summary

• Ally Financial stock has increased over 46% since October 2023, with a dividend yield now at 3.3%.
• Interest rate changes and tightening of finances are expected to be catalysts for Ally's growth in 2024.
• ALLY's auto segment is strong, with increased loan originations and high-quality borrowers, contributing to profitability.

Overview

I previously rated Ally Financial ( ALLY ) as a buy in October 2023. It seems that my timing was ideal, as the stock has now moved up over 46% since then. The price appreciation was more severe than anticipated and happened much quicker than expected. At the time of my original analysis, the dividend yield sat at about 4.6%. After the price run, the dividend yield now sits at only 3.3% which is less enticing but on par with the sector median. Therefore, I thought that now would be a great time to revisit and reassess what the current outlook is moving forward....

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