Ally(ALLY) ZACKS·2024-09-16 13:26Core Viewpoint - Ally Financial's shares experienced a significant decline of 16.6% last week, which is notably higher than the industry's decline of 0.4% [1][2]. Company Performance - The stock price of Ally Financial dropped sharply on September 10, following comments from CFO Russ Hutchinson regarding deteriorating credit conditions among borrowers [2]. - Delinquencies in Ally's retail auto-loan business increased by approximately 20 basis points above expectations in July and August, with net charge-offs (NCOs) also exceeding expectations by 10 basis points [3]. - The company is expected to see further increases in NCO rates, particularly in the 61-plus-day delinquency category, due to a challenging economic environment [3]. Financial Guidance - Despite the recent stock decline, Ally Financial's 2024 guidance remains unchanged, focusing on managing capital levels and expenses [5]. - Loan losses are projected to rise in 2024, with retail auto NCO rates expected to increase to approximately 2.1% from a previous estimate of 1.9% [6]. - The company's net interest margin (NIM) is anticipated to expand in the third quarter, with projections of reaching 3.45-3.50% by the fourth quarter of 2024 [6]. Sales and Earnings Estimates - Current sales estimates for the upcoming quarters are 2.16 billion for Q4 2024, with year-over-year growth rates of 6.08% and 4.26% respectively [7]. - Earnings per share (EPS) estimates for Q3 2024 and Q4 2024 are 0.99, with a year-over-year growth estimate of 1.20% for Q3 [8]. - Recent revisions indicate a downward trend in earnings estimates due to anticipated increases in loan losses [9]. Market Position - Ally Financial's stock is currently trading below its 50-day simple moving average, which is often interpreted as a bearish signal [9]. - In comparison, peers such as Capital One and SLM Corporation have shown positive stock performance, with increases of 6% and 11% respectively year-to-date [4].