Checking Ally Financial shares after last week’s earnings
Is ALLY’s dividend yield worth the risk?
Ally Financial Inc. (NYSE:ALLY) declared a quarterly cash dividend of $0.30 per common share of the financial company on April 13, payable May 16 to shareholders of record as of May 2. ALLY offers a dividend yield of 2.68% with a forward dividend of $1.20.
The company also shared a beaten first-quarter profit and revenue just a day later, though analysts weren’t responding kindly as ALLY also shared lower earnings. Since that report late last week, five analysts have stepped in with price target cuts. The most recent came from BofA Global Research, which lowered its price target to $52 from $62. The 12-month consensus price target of $59.26 still represents a hefty 33.7% premium to current levels.
ALY has been declining for most of the year, losing 8.5% over this period. However, the stock recently moved back above the 30-day moving average, which pushed it lower for most of the month. Additionally, Ally shares trade at a low forward price-to-earnings ratio of 5.54 but a relatively high price-to-sell ratio of 1.83.
From a fundamental standpoint, the Ally stock offers very little consistency and stability. Ally Financial holds $5.06 billion in cash and $17.27 billion in total debt on its balance sheet. ALLY is also expected to deliver limited growth for fiscal 2023, with expected earnings growth of 0.9% and expected revenue growth of 4.7%, making the stock ideal for long-term investors. despite a decent dividend yield.