Ally Financial (NYSE:ALLY) and WMIH (NASDAQ:COOP) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Earnings & Valuation

This table compares Ally Financial and WMIH’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ally Financial $9.87 billion 1.08 $929.00 million $2.39 10.78
WMIH $7.89 million 34.57 $25.88 million $0.12 125.92

Ally Financial has higher revenue and earnings than WMIH. Ally Financial is trading at a lower price-to-earnings ratio than WMIH, indicating that it is currently the more affordable of the two stocks.

Dividends

Ally Financial pays an annual dividend of $0.60 per share and has a dividend yield of 2.3%. WMIH does not pay a dividend. Ally Financial pays out 25.1% of its earnings in the form of a dividend.

Volatility and Risk

Ally Financial has a beta of 1.23, meaning that its share price is 23% more volatile than the S&P 500. Comparatively, WMIH has a beta of -0.63, meaning that its share price is 163% less volatile than the S&P 500.

Institutional and Insider Ownership

98.7% of Ally Financial shares are held by institutional investors. 0.2% of Ally Financial shares are held by insiders. Comparatively, 1.7% of WMIH shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Ally Financial and WMIH’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ally Financial 16.87% 10.25% 0.79%
WMIH 229.44% 18.07% 3.40%

Analyst Ratings

This is a summary of current recommendations and price targets for Ally Financial and WMIH, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ally Financial 0 6 12 0 2.67
WMIH 0 2 1 0 2.33

Ally Financial currently has a consensus target price of $32.82, suggesting a potential upside of 27.42%. WMIH has a consensus target price of $20.50, suggesting a potential upside of 35.67%. Given WMIH’s higher possible upside, analysts clearly believe WMIH is more favorable than Ally Financial.

About Ally Financial

Ally Financial Inc. provides various financial products and services for consumers, businesses, automotive dealers, and corporate clients in the United States and Canada. The company operates Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment provides automotive financing services to consumers and automotive dealers. Its automotive finance services include providing retail installment sales contracts, loans and leases, term loans to dealers, financing dealer floorplans, other lines of credit to dealers, warehouse lines to companies, and fleet financing. This segment also offers financing services to companies and municipalities for the purchase or lease of vehicles and equipment, and vehicle remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. The Mortgage Finance Operations segment manages held-for-investment consumer mortgage finance loan portfolio that includes bulk purchases of high-quality jumbo and LMI mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies. Its primary focus is on businesses owned by private equity sponsors with loans used for leveraged buyouts, mergers and acquisitions, debt refinancing, restructurings, and working capital. The company, through its subsidiary, Ally Bank, also offers commercial banking products and services. In addition, it provides digital wealth management and online brokerage platform services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is headquartered in Detroit, Michigan.

About WMIH

Mr. Cooper Group Inc. provides servicing, origination, and transaction-based services related principally to single-family residences in the United States. It offers home loan servicers focused on delivering various servicing and lending products, services, and technologies. The company provides technology and data enhanced solutions to homebuyers, home sellers, real estate agents, and mortgage companies. It operates primarily under the Mr. Cooper and Xome brands. The company was formerly known as WMIH Corp. and changed its name to Mr. Cooper Group Inc. in October 2018. Mr. Cooper Group Inc. is based in Coppell, Texas.

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