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Ally Financial Stock Worth Owning Due to Diversification and Expansion: Zacks

With Ally Financial Inc. (ALLY) diversifying its business and launching new digital products, Zacks Investment Research believes that investors should own the company behind the Ally Invest robo-advisory service.

In a recent research report, Zacks called the stock performance of Ally Financial “impressive,” with shares gaining 31.7% over the past year and outperforming the roughly 3.5% growth of the industry it is part of. What’s more, the research firm noted that the Zacks Consensus Estimate on Ally for the current year has been revised upward during the past 30 days, which implies that analysts are becoming more bullish on the stock and its growth potential. Shares of Ally Financial were recently trading at $27.69, up $0.22, or 0.8%.

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“With respect to the price/book and price/earnings ratios, Ally Financial seems undervalued,” wrote Zacks in the report, noting that these ratios for the company are below the industry averages. With Ally’s revenue backed by strong originations and growth in retail loans, Zacks believes that the fintech company should continue to see revenue grow this year and next, projecting sales growth of 3.9% this year and 4.3% next year. Meanwhile, EPS growth is expected to be 26.8% this year and 14.7% next year. Over the three- to five-year period, Zacks forecasts Ally’s average EPS growth at 12.7%, which is higher than the three- to five-year growth expectations of 11.4% for the industry.

“Ally Financial has significantly improved its balance sheet and fundamentals. Its 2017 capital plan (approved by the Fed) includes a dividend hike and $760 million share repurchase authorization. Given the capital strength and favorable dividend payout ratio, the company should be able to sustain improved capital deployments,” wrote Zacks.

The bullish call from Zacks comes at a time when Ally Financial is gearing up to launch a big marketing and branding push. Ally has long focused its marketing on its business-to-business products. But last year, the company got into the mortgage, credit card and online investing segments of financial services, and it wants to get the word out about those products as well. As a result, Ally has sent out a request for proposals to ad agencies and public relations firms. The idea is to launch a new marketing effort in the fourth quarter, according to Crain’s Detroit Business.

The post Ally Financial Stock Worth Owning Due to Diversification and Expansion: Zacks appeared first on News World.



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