Ally Financial Analyst Sees 'Consistent Margin Expansion' Ahead: Q2 Results Breakdown

Shares of Ally Financial Inc (NYSE:ALLY) remained under pressure on Thursday, after declining in the prior session amid a broader downturn in Wall Street stocks.

Ally Financial reported results amid an exciting earnings season. Here are some key analyst takeaways.

RBC Capital Markets On Ally Financial

Analyst Jon Arfstrom reiterated an Outperform rating, while lifting the price target from $46 to $49.

Ally Financial announced earnings of 86 cents per share, amid higher electric vehicle originations driving $92 million in tax credits or 30 cents per share in earnings, Arfstrom said in a note. "Fundamentals were driven by margin improvement, stable balance sheet trends, and seasonally lower losses," he added.

With margin inflection taking hold, the company is expected to generate "consistent margin expansion in the coming quarters, which is the primary driver of expected higher earnings and returns," the analyst stated. "Credit expectations remain important, and we see an improved origination mix as positive drivers for later in 2024 and beyond," he further wrote.

Check out other analyst stock ratings.

BMO Capital Markets On Ally Financial

Analyst James Fotheringham maintained a Market Perform rating and price target of $39.

Ally Financial's core earnings came in at 70 cents per share, surpassing consensus of 64 cents per share, "with lower-than-expected credit provisions (lower net losses) more than offset disappointing revenues (lower NII and fees)," Fotheringham wrote in a note.

Management announced disappointing credit guidance, with 2024 NCOs of 145-150 basis points (bps) and retail auto NCOs of 210 bps, the analyst stated. "We lower our ALLY core EPS estimates by -1% in 2024E (to $2.86 from $2.90), -1% in 2025E (to $5.57 from $5.64), and -1% 2026E (to $6.49 from $6.55) due predominately to higher-than[1]previously modeled share counts (from lower expected share repurchases)," he further said.

ALLY Price Action: Shares of Ally Financial were down 2.05% to $42.54 at the time of publication on Thursday.

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