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Is Ally Financial (ALLY) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is Ally Financial (ALLY). ALLY is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 7, while its industry has an average P/E of 7.11. Over the last 12 months, ALLY's Forward P/E has been as high as 12.09 and as low as 6.76, with a median of 8.84.

Finally, our model also underscores that ALLY has a P/CF ratio of 4.51. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. ALLY's P/CF compares to its industry's average P/CF of 5.29. Over the past year, ALLY's P/CF has been as high as 6.59 and as low as 3.76, with a median of 4.87.

These are just a handful of the figures considered in Ally Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that ALLY is an impressive value stock right now.


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