Yahoo Finance ALLY vs. CACC: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Financial - Consumer Loans sector might want to consider either Ally Financial (ALLY) or Credit Acceptance (CACC). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Ally Financial has a Zacks Rank of #1 (Strong Buy), while Credit Acceptance has a Zacks Rank of #2 (Buy). Investors should feel comfortable knowing that ALLY likely has seen a stronger improvement to its earnings outlook than CACC has recently. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
ALLY currently has a forward P/E ratio of 8.79, while CACC has a forward P/E of 15.84. We also note that ALLY has a PEG ratio of 0.69. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. CACC currently has a PEG ratio of 0.80.
Another notable valuation metric for ALLY is its P/B ratio of 0.87. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, CACC has a P/B of 4.66.
These are just a few of the metrics contributing to ALLY's Value grade of A and CACC's Value grade of C.
ALLY sticks out from CACC in both our Zacks Rank and Style Scores models, so value investors will likely feel that ALLY is the better option right now.
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Ally Financial Inc. (ALLY) : Free Stock Analysis Report
Credit Acceptance Corporation (CACC) : Free Stock Analysis Report
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