Is Ally Financial (ALLY) Ahead of Second Quarter Results?


Ally Financial Inc. ALLY is expected to release its second quarter 2021 results on July 20, ahead of the opening bell. Its profits and revenues in the reporting quarter are expected to have increased year over year.

In the last quarter reported, the company’s profits exceeded Zacks’ consensus estimate. The results benefited from the growth in turnover and allocations to provisions, partially offset by an increase in expenses.

Ally Financial has an impressive history of earnings surprises. Its profits have beaten Zacks’ consensus estimate in each of the past four quarters, the average pace being 110.5%.

Ally Financial Inc. Pricing and BPA Surprise

Ally Financial Inc. Pricing and BPA Surprise

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

Key estimates for the second quarter

Zacks’ consensus estimate for interest and charges on financial receivables and loans is set at $ 1.59 billion, indicating a marginal increase from the number reported in the previous quarter.

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

Driven by an expected increase in interest and charges on financial receivables and loans (the main component of interest income), total financing income and other interest income is expected to improve in the quarter. The consensus estimate for the same is set at $ 2.14 billion, suggesting sequential growth of 2.3%.

Looking at the components of commission income, the consensus estimate of insurance premiums and earned service income of $ 272 million suggests a decline of 2.9% sequentially. Zacks’ consensus estimate for a net gain on mortgages and auto loans of $ 22 million indicates a decline of 38.9% from the prior quarter.

The consensus estimate of other net investment gains is set at $ 98 million, indicating a sequential decline of 20.3%. In addition, the consensus estimate of other net income of $ 86 million suggests a decrease of 32.3%.

Therefore, due to an anticipated decline in all components of fee income, total non-interest income is expected to have declined during the quarter. Zacks’ consensus estimate for total other income is set at $ 472 million, which suggests a decline of 16.5% sequentially.

On the expense side, Ally Financial has witnessed a persistent increase in spending over the past few quarters. As it launches new products and looks to expand into new areas of business, overall costs are likely to have been high in the second quarter as well.

Whispers of gains

Our proven model shows that Ally Financial has the right combination of the two key ingredients – a positive earnings ESP and a Zacks (Hold) rank 3 or better – to increase the odds of a beaten earnings this time around.

You can discover the best stocks to buy or sell before they are flagged with our ESP Earnings Filter.

ESP on earnings: The PSE of profits for Ally Financial is + 6.64%.

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

Zacks’ consensus estimate for the company’s second quarter earnings is set at $ 1.49, which has been revised up 2.1% in the past seven days. The figure indicates an increase of 144.3% from the number reported in the quarter of the previous year.

The consensus sales estimate is set at $ 1.86 billion, which suggests a 15.6% year-over-year increase.

Other actions that deserve a look

Here are some other financial stocks that you might want to consider, because according to our model, they too have the right mix of items to show a profit beat in their next posts.

ESP gains for KeyCorp KEY is + 0.26%. Zacks Ranked No.3 is expected to release quarterly figures on July 20. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

Bank United, Inc. BKU is expected to release profit figures on July 22. The company, which currently holds a Zacks rank of 3, has an ESP on earnings of + 3.07%.

T. Rowe Price Group, Inc. TROW is expected to release its quarterly results on July 29. The company currently has an ESP on earnings of +1.04% and a Zacks rank of 3.

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