Ally Financial Inc. :Overview of Business and Intrinsic Value of shares

 

 

Ally Financial Inc. is a Financial service company with $196.6 billion in assets. Primary businesses of Ally Financial Inc. are Dealer Financial services, which is composed of Automotive Finance and insurance operations, Mortgage Finance and Corporate Finance.

The company serves customers through a full range of online banking services, securities brokerage and investment advisory services.

 

Ally Financial Inc. incorporated in Delaware and headquartered at Ally Detroit Center in Detroit, Michigan.

 

 

FCFE Details of Ally Financial Inc. shown below, US$ in millions, except per share data

Year	Value	FCFE or Terminal Value	Present Value at 17.49%
0	FCFE0	1083	1083
1	FCFE1	1124	922
2	FCFE2	1178	815
3	FCFE3	1245	727
4	FCFE4	1327	654
5	FCFE5	1427	593
5	Terminal Value (TV5)	15413	4793

Intrinsic value of Ally Financial Inc.	$11678 Million
Market cap of Ally Financial Inc.	$11.7 Billion
Intrinsic value of Ally Financial Inc. common stock (per share)	$38
Current share price on 02/07/2024	$38.30

 

Required rate of Return

Assumptions

Rate of return on LT Treasury Composite(Rf)	4.36%
Expected rate of return on market portfolio(E(RM)	13.81%
Systematic risk of Ally Financial Inc. Common stock (β)	0.95
Required rate of return on Ally Financial Inc. Common Stock (r) Calculation : Rf + β(E(RM)- (Rf) = 4.36% +1.39[13.81% - 4.36%]	17.49%

 

 

 

 

 

 

FCFE Growth rate Forecast

Ally Financial Inc. H-Model

Year	Value	Growth Rate
1	g1 (PRAT Model)	3.85%
2	g2 (Linear Interpolation)	4.77%
3	g3 (Linear Interpolation)	5.69%
4	g4 (Linear Interpolation)	6.61%
5	g5 (Single stage model)	7.53%

 

Financial year 2023 Ratio Calculations & Financial Data

Dividend yield	2.34%
Profit margin	12.44%
CET1 Capital Ratio	9.4%
Total Assets	196.4 B
Total Deposits	154.7 B
Book Value per share	$ 46
Return on Equity	8.3%
EPS	3.05
PE Ratio	12.56

 

 

 

 

 

 

 

 

Sources : Form 10K of Ally Financial Inc. for the fiscal year 2023 https://www.ally.com/about/investor/annual-reports/ , https://www.stock-analysis-on.net/ , https://finance.yahoo.com , https://companiesmarketcap.com/

 

 

 

 

Disclosures

This report is based on information obtained in good faith from public sources and sources believed to be reliable, but no independent verification has been made nor is its accuracy or completeness guaranteed. This report and information herein is solely for informational purpose and shall not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments.