Ally is down about 0.1 percent today, its fourth straight session of barely moving, and it remains about 3 percent below its July high. We think this is just normal market noise, as there was no company news and the small move didn't follow the broader market's gains.
Our view
Ally is seeing record demand for car loans and its profit margins are heading in the right direction. If you have been thinking about buying it, the current price is a fair one to pay. Owners should sit tight.
Cleveland Fed President calls for immediate interest rate hikes
Cleveland Federal Reserve President Beth Hammack stated that the central bank should raise interest rates right away to bring down inflation. The Federal Reserve is the group that sets the cost of borrowing in the U.S. to keep the economy stable.
For a company like Ally, which makes most of its money from car loans, higher rates are a double-edged sword. While they can charge more for loans, higher rates also make it more expensive for Ally to borrow the money it lends out and can make it harder for customers to keep up with their monthly payments.
Wholesale prices, which track what businesses pay for goods before they reach consumers, remained unchanged in July. This is a sign that the rapid rise in the cost of living may be slowing down. Lower inflation generally makes it easier for the Federal Reserve to eventually lower interest rates. For Ally, a cooling economy with lower rates is usually helpful because it lowers their own borrowing costs and reduces the risk that car buyers will fall behind on their loans.
Ally earns several awards for digital banking and culture
Ally was named the best overall online bank by the Wall Street Journal for the fifth year in a row. It also ranked sixth on the Forbes list of the world's best banks. These recognitions help confirm that Ally is maintaining its lead in digital banking even as traditional banks try to catch up.
Neuberger Berman reduced its target for the stock price by about 8 percent. This move came shortly after the company reported its second-quarter earnings. Even with the lower target, the firm still sees the stock as worth more than its current price of about $45.
Sean Leary to lead auto finance servicing operations
Sean Leary has been appointed to lead the team that handles customer accounts and payments for the auto lending arm. This is a key role because auto loans are the biggest part of Ally's business. Having an experienced leader in this spot helps ensure the company manages its loan collections and customer service effectively.
Analysts recently adjusted their outlooks following the company's second-quarter earnings miss. Most analysts remain positive, with 26 of 38 rating the stock a buy and an average target of $54, suggesting 23% upside from today's price.
Average target$54.43+23%vs $44.19 today
TodayAvg price
Low $49High $58
Buy38 analysts
1Bearish
11Neutral
26Bullish
FirmRatingPrice TargetDate
Neuberger Berman
—
$53→$49
7/23/2026
Deutsche Bank
—
$57→$58
7/22/2026
RBC Capital
Outperform
$52→$55
7/10/2026
Neuberger Berman
—
$53
7/8/2026
Wells Fargo
Overweight
$52→$55
6/26/2026
Truist Financial
Buy
$50→$54
4/21/2026
Evercore ISI
Outperform
$46→$54
4/21/2026
Goldman Sachs
Buy
$50→$56
4/20/2026
Evercore ISI
Outperform
$53→$51
2/5/2026
Truist Financial
Buy
$51→$50
1/26/2026
Deutsche Bank
—
$55→$57
1/22/2026
RBC Capital
Outperform
$45→$52
1/12/2026
Ally Financial earnings
The company has a strong habit of clearing the bars set by analysts, beating profit expectations in seven of the last eight quarters. This suggests management is conservative with its forecasts.
Earnings history
EstimateBeatMiss
Ally Financial past earnings results
Expected
Actual
Surprise
EPS
$1.22
$1.21
-0.8%
Revenue
$2.22B
$2.28B
+2.5%
Key highlights
Profitability and margins expanding: The net interest margin, which is the difference between what the bank earns on loans and pays on deposits, rose to 3.63% from 3.45% a year ago. This expansion shows the bank is successfully managing the gap between its lending rates and the interest it pays to customers.
Auto loan quality improving: Retail auto net charge-offs, which are loans the bank no longer expects to collect, dropped to 1.57% from 1.75% last year. This 18 basis point improvement suggests that borrowers are staying current on their car payments despite higher interest rates.
Origination yields under pressure: The yield on new retail auto loans was 9.09% in the quarter, which is a decline from the 9.63% reported at the end of 2024. While the bank is still lending at high rates, the lower yield on new business could eventually slow the growth of its interest income.
Deposit growth and retention: Retail deposits grew to $143.6 billion, an increase of $408 million compared to the prior year. While balances dipped slightly from the previous quarter, the bank added 63,000 net new customers, showing it can still attract savers in a competitive market.
Capital returned to shareholders: The company bought back $148 million of its own shares and paid a quarterly dividend of $0.30 per share. These actions were supported by a common equity tier 1 ratio of 10.1%, a measure of financial strength that sits above the bank's internal requirements.
Outlook for earnings power: Management expects its path forward to include improved earnings and expanding returns as they enter the second half of 2026. This confidence is backed by a record 4.6 million auto applications during the quarter, which suggests a steady pipeline of new loan business.
Our take: This was a strong quarter that showed the bank's core business is getting more profitable even as the economy shifts. The jump in net interest margin to 3.63% is the clear highlight, proving that Ally can earn more from its loans than it pays out to savers. This result reinforces the case for a stable, high-yielding investment.
