Is Ally Financial (ALLY) Stock Undervalued 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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 to watch right now is Ally Financial (ALLY). ALLY is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
ALLY is also sporting a PEG ratio of 0.56. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ALLY's industry has an average PEG of 0.72 right now. Over the last 12 months, ALLY's PEG has been as high as 0.64 and as low as 0.45, with a median of 0.57.
Finally, our model also underscores that ALLY has a P/CF ratio of 3.88. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 4.67. Over the past year, ALLY's P/CF has been as high as 4.32 and as low as 3.08, with a median of 3.93.
Value investors will likely look at more than just these metrics, but the above data helps show that Ally Financial is likely undervalued currently. And when considering the strength of its earnings outlook, ALLY sticks out at as one of the market's strongest value stocks.
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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.