Ally Financial exceeds third quarter estimates; The street remains bullish
Ally Financial announced on Friday that adjusted earnings per share rose 24% in the third quarter year-on-year to $ 1.25 per share, beating analysts’ estimates by $ 0.68. Its revenue rose 4% to $ 1.68 billion from the Street consensus of $ 1.55 billion. Shares rose 2.7% on Friday.
Ally Financial (ALLYCEO Jeffrey Brown said third quarter results “reflect the continued strength of credit performance, focused execution of our core auto finance and deposit businesses, as well as the continued momentum of our expanded consumer offerings. “.
Excluding Core OIDB (Original Issue Discount Balance), the net interest margin (NIM) was 2.67% in Q3, down 5 basis points from the same period last year. The company said the net interest margin had shrunk due to “high liquidity levels and amortization of mortgage premiums that more than offset the higher gains on non-lease vehicles, the expansion of the auto portfolio yield. retail and lower financing costs “. (See the analysis of ALLY shares on TipRanks).
On September 25, the BMO Capital analyst James fotheringham maintained a buy rating on the stock and a target price of $ 35 (upside potential 22.3%). The analyst had forecast that net interest income would see “significant growth” in 3Q20, as NIM rebounds and expands by around 25 basis points from the previous quarter. The analyst also increased his estimate of 2020 EPS by 25% but reduced his estimate of 2021 EPS by 5% (to $ 4.08 from $ 4.27) and 4% in 2022 (to $ 5.09 against $ 5.29) due to higher expense growth expectations.
Currently, the street is bullish on the stock. Strong Buy analysts’ consensus is based on 6 Buys and 1 Hold. The average price target of $ 30.71 implies an upside potential of approximately 7.3% from current levels. Shares are down about 6.3% year-to-date.
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