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Is a Beat in Store for Ally Financial (ALLY) in Q2 Earnings?

Ally Financial Inc. ALLY is slated to report second-quarter 2021 results on Jul 20, before the opening bell. Its earnings and revenues in the to-be-reported quarter are expected to have increased on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from growth in revenues and provision benefits, partly offset by a rise in expenses.

Ally Financial has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 110.5%.

Ally Financial Inc. Price and EPS Surprise

 

Ally Financial Inc. Price and EPS Surprise

Ally Financial Inc. price-eps-surprise | Ally Financial Inc. Quote

Key Estimates for Q2

The Zacks Consensus Estimate for interest and fees on finance receivables and loans is pegged at $1.59 billion, indicating a marginal rise from the previous quarter’s reported number.

The consensus estimate for interest on loans held for sale is pegged at $4.5 million, suggesting a sequential decline of 10%.

Driven by an expected increase in interest and fees on finance receivables and loans (the major component of interest income), total financing revenues and other interest income are expected to have improved in the quarter. The consensus estimate for the same is pegged at $2.14 billion, suggesting 2.3% growth sequentially.

Looking at the fee income components, the consensus estimate for insurance premiums and service revenues earned of $272 million suggests a decline of 2.9% sequentially. The Zacks Consensus Estimate for net gain on mortgage and automotive loans of $22 million indicates a decline of 38.9% from the previous quarter.

The consensus estimate for net other gains on investments is pegged at $98 million, indicating a 20.3% sequential fall. Also, the consensus estimate for net other income of $86 million suggests a 32.3% decline.

Thus, due to an anticipated decline in all fee income components, total non-interest income is expected to have fallen in the quarter. The Zacks Consensus Estimate for total other revenues is pegged at $472 million, suggesting a decline of 16.5% sequentially.

Coming to expenses, Ally Financial has been witnessing a persistent rise in expenses over the past several quarters. As it launches new products and seeks to expand into newer areas of operations, overall costs are likely to have been elevated in the second quarter as well.

Earnings Whispers

Our proven model shows that Ally Financial has the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat this time around.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Ally Financial is +6.64%.

Zacks Rank: The company currently carries a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for the company’s second-quarter earnings is pegged at $1.49, which has been revised 2.1% upward over the past seven days. The figure indicates a rise of 144.3% from the year-ago quarter’s reported number.

The consensus estimate for sales is pegged at $1.86 billion, suggesting a year-over-year rise of 15.6%.

Other Stocks That Warrant a Look

Here are some other finance stocks that you may want to consider, as according to our model, these too have the right combination of elements to post an earnings beat in their upcoming releases.

The Earnings ESP for KeyCorp KEY is +0.26%. The Zacks Ranked #3 company is scheduled to report quarterly numbers on Jul 20. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BankUnited, Inc. BKU is scheduled to release earnings numbers on Jul 22. The company, which carries a Zacks Rank of 3 at present, has an Earnings ESP of +3.07%.

T. Rowe Price Group, Inc. TROW is slated to report quarterly results on Jul 29. The company currently has an Earnings ESP of +1.04% and a Zacks Rank of 3.


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Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor. 

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T. Rowe Price Group, Inc. (TROW): Free Stock Analysis Report

BankUnited, Inc. (BKU): Free Stock Analysis Report

Ally Financial Inc. (ALLY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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