Are Investors Undervaluing Ally Financial (ALLY) Right Now?

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, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 stock to keep an eye on is Ally Financial (ALLY). ALLY is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 7.68 right now. For comparison, its industry sports an average P/E of 8.26. Over the last 12 months, ALLY's Forward P/E has been as high as 8.73 and as low as 7.03, with a median of 7.67.

ALLY is also sporting a PEG ratio of 0.64. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ALLY's PEG compares to its industry's average PEG of 0.72. ALLY's PEG has been as high as 0.66 and as low as 0.45, with a median of 0.58, all within the past year.

Investors should also recognize that ALLY has a P/B ratio of 0.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 0.90. Within the past 52 weeks, ALLY's P/B has been as high as 0.96 and as low as 0.78, with a median of 0.85.

Finally, investors will want to recognize that ALLY has a P/CF ratio of 3.91. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.05. ALLY's P/CF has been as high as 4.44 and as low as 3.54, with a median of 3.94, all within the past year.

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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Ally Financial Inc. (ALLY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research