Ally Financial Q3 adjusted revenue beats estimates

Overview

• US digital bank and auto lender's Q3 adjusted revenue beat analyst expectations

• Adjusted EPS for Q3 met analyst expectations

• Provision for credit losses increased due to CECL reserve builds tied to asset growth

Outlook

• Company did not provide specific financial guidance for upcoming quarters or full year in its press release

Result Drivers

• AUTO ASSET GROWTH – Auto Finance net financing revenue rose $15 mln yr/yr to $1.3 bln, driven by growth in retail and commercial auto assets

• CREDIT RESERVE BUILDS – Provision for credit losses rose $114 mln yr/yr to $529 mln, primarily due to CECL reserve builds tied to asset growth

• INSURANCE UNDERWRITING – Insurance core pre-tax income rose $23 mln yr/yr to $75 mln, primarily driven by higher underwriting income

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 14 "strong buy" or "buy", 5 "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the consumer lending peer group is "buy"

• Wall Street's median 12-month price target for Ally Financial Inc is $50.00, about 33% above its October 19 closing price of $37.59

• The stock recently traded at 6 times the next 12-month earnings vs. a P/E of 8 three months ago

Reuters Recommended Reads

• Oct 20 - KeyCorp Q3 revenue rises 8% to record, profit up 24%

• Oct 19 - Zions Bancorp Q3 EPS rises 20% on improved credit quality

• Oct 19 - Western Alliance Bancorp Q3 revenue slightly beats estimates, profit rises on wider interest margin

For questions concerning the data in this report, contact Estimates.Support@lseg.com. For any other questions or feedback, contact reuters.support@thomsonreuters.com.

(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)