Yahoo Finance Is Ally Financial Inc (NYSE:ALLY) Undervalued?
Let’s talk about the popular Ally Financial Inc (NYSE:ALLY). The company’s shares saw significant share price volatility over the past couple of months on the NYSE, rising to the highs of $27.98 and falling to the lows of $25.25. This high level of volatility gives investors the opportunity to enter into the stock, and potentially buy at an artificially low price. A question to answer is whether Ally Financial’s current trading price of $26.54 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Ally Financial’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Check out our latest analysis for Ally Financial
What is Ally Financial worth?
According to my valuation model, Ally Financial seems to be fairly priced at around 16.8% below my intrinsic value, which means if you buy Ally Financial today, you’d be paying a reasonable price for it. And if you believe the company’s true value is $31.88, then there isn’t much room for the share price grow beyond what it’s currently trading. So, is there another chance to buy low in the future? Given that Ally Financial’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us an opportunity to buy later on. This is based on its high beta, which is a good indicator for share price volatility.
What kind of growth will Ally Financial generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. With profit expected to grow by 33.0% over the next couple of years, the future seems bright for Ally Financial. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.
What this means for you:
Are you a shareholder? It seems like the market has already priced in ALLY’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?
Are you a potential investor? If you’ve been keeping an eye on ALLY, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Ally Financial. You can find everything you need to know about Ally Financial in the latest infographic research report. If you are no longer interested in Ally Financial, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
