Ally Financial Beneish M Score

ALLY
 Stock
  

USD 26.12  0.20  0.77%   

This module uses fundamental data of Ally Financial to approximate the value of its Beneish M Score. Ally Financial M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Please continue to Ally Financial Piotroski F Score and Ally Financial Altman Z Score analysis.
  
Ally Financial Long Term Debt is fairly stable at the moment as compared to the past year. Ally Financial reported Long Term Debt of 17.03 Billion in 2021. Total Debt is likely to rise to about 17.5 B in 2022, whereas Issuance Repayment of Debt Securities is likely to drop (5.6 B) in 2022. Ally Financial Enterprise Value over EBIT is fairly stable at the moment as compared to the past year. Ally Financial reported Enterprise Value over EBIT of 5.00 in 2021. Enterprise Value over EBITDA is likely to rise to 4.17 in 2022, whereas Accrued Expenses Turnover is likely to drop 12.53 in 2022.
At this time, it appears that Ally Financial is an unlikely manipulator. The earnings manipulation may begin if Ally Financial's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Ally Financial executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Ally Financial's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-2.99
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.86Focus
Asset QualityN/AFocus
Expense Coverage0.82Focus
Gross Margin Strengs1.08Focus
Accruals Factor0.82Focus
Depreciation ResistanceN/AFocus
Net Sales Growth1.12Focus
Financial Leverage Condition1.01Focus

Ally Financial Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Ally Financial's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
Selling General and Administrative Expense1.5 B1.6 B
Significantly Down
Increasing
Slightly volatile
Revenues12 B10.7 B
Moderately Up
Decreasing
Slightly volatile
Trade and Non Trade Receivables2.6 B2.7 B
Sufficiently Down
Increasing
Slightly volatile
Operating Income3.4 B4.1 B
Significantly Down
Increasing
Slightly volatile
Net Cash Flow from Operations4.9 BB
Fairly Up
Decreasing
Slightly volatile
Total Liabilities152.3 B165.1 B
Significantly Down
Increasing
Slightly volatile
Investments174.6 B166.3 B
Sufficiently Up
Increasing
Slightly volatile
Gross Margin1.050.968
Significantly Up
Increasing
Slightly volatile
Depreciation Amortization and Accretion1.6 B1.3 B
Significantly Up
Decreasing
Slightly volatile
Total Debt17.5 B17 B
Fairly Up
Decreasing
Slightly volatile
Total Assets167.9 B182.1 B
Significantly Down
Increasing
Stable

Ally Financial Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Ally Financial's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Ally Financial in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Ally Financial's degree of accounting gimmicks and manipulations.

About Ally Financial Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Depreciation Amortization and Accretion

1.58 Billion

Ally Financial Depreciation Amortization and Accretion is fairly stable at the moment as compared to the past year. Ally Financial reported Depreciation Amortization and Accretion of 1.26 Billion in 2021

Ally Financial Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Ally Financial. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Trade and Non Trade Receivables2.05 B2.33 B2.56 B2.68 B2.72 B2.63 B
Revenues9.87 B10.47 B11.62 B10.78 B10.69 B12.03 B
Total Assets167.15 B178.87 B180.64 B182.16 B182.11 B167.94 B
Depreciation Amortization and Accretion1.86 B1.65 B1.55 B1.55 B1.26 B1.58 B
Selling General and Administrative Expense1.09 B1.16 B1.22 B1.38 B1.64 B1.52 B
Total Liabilities153.65 B165.6 B166.23 B167.46 B165.06 B152.34 B
Total Debt55.64 B54.18 B39.56 B24.14 B17.03 B17.48 B
Operating Income2.65 B2.54 B2.96 B2.85 B4.1 B3.37 B
Net Cash Flow from Operations4.08 B4.15 B4.05 B3.74 B4.04 B4.91 B
Investments155.19 B165.85 B168.46 B157.45 B166.27 B174.64 B

Ally Financial ESG Sustainability

Some studies have found that companies with high sustainability scores are getting higher valuations than competitors with lower social-engagement activities. While most ESG disclosures are voluntary and do not directly affect the long term financial condition, Ally Financial's sustainability indicators can be used to identify proper investment strategies using environmental, social, and governance scores that are crucial to Ally Financial's managers, analysts, and investors.
Environment Score
Governance Score
Social Score

About Ally Financial Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Ally Financial's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Ally Financial using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Ally Financial based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Ally Financial Inc., a digital financial-services company, provides various digital financial products and services to consumer, commercial, and corporate customers primarily in the United States and Canada. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan. Ally Financial operates under Credit Services classification in the United States and is traded on New York Stock Exchange. It employs 10500 people.

Be your own money manager

Our tools can tell you how much better you can do entering a position in Ally Financial without increasing your portfolio risk or giving up the expected return. As an individual investor, you need to find a reliable way to track all your investment portfolios. However, your requirements will often be based on how much of the process you decide to do yourself. In addition to allowing all investors analytical transparency into all their portfolios, our tools can evaluate risk-adjusted returns of your individual positions relative to your overall portfolio.

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Pair Trading with Ally Financial

One of the main advantages of trading using pair correlations is that every trade hedges away some risk. Because there are two separate transactions required, even if Ally Financial position performs unexpectedly, the other equity can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ally Financial will appreciate offsetting losses from the drop in the long position's value.

Moving against Ally Financial

-0.53JPMJPMorgan Chase Fiscal Year End 13th of January 2023 PairCorr
The ability to find closely correlated positions to Ally Financial could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Ally Financial when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Ally Financial - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Ally Financial to buy it.
The correlation of Ally Financial is a statistical measure of how it moves in relation to other equities. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A perfect positive correlation (i.e., a correlation coefficient of +1) implies that as Ally Financial moves, either up or down, the other security will move in the same direction. Alternatively, perfect negative correlation means that if Ally Financial moves in either direction, the perfectly negatively correlated security will move in the opposite direction. If the correlation is 0, the equities are not correlated; they are entirely random. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak.
Correlation analysis and pair trading evaluation for Ally Financial can also be used as hedging techniques within a particular sector or industry or even over random equities to generate a better risk-adjusted return on your portfolios.
Pair CorrelationCorrelation Matching
Please continue to Ally Financial Piotroski F Score and Ally Financial Altman Z Score analysis. You can also try Probability Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

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Is Ally Financial's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Ally Financial. If investors know Ally Financial will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Ally Financial listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
(0.54) 
Market Capitalization
7.8 B
Quarterly Revenue Growth YOY
(0.14) 
Return On Assets
0.0114
Return On Equity
0.14
The market value of Ally Financial is measured differently than its book value, which is the value of Ally Financial that is recorded on the company's balance sheet. Investors also form their own opinion of Ally Financial's value that differs from its market value or its book value, called intrinsic value, which is Ally Financial's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Ally Financial's market value can be influenced by many factors that don't directly affect Ally Financial's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Ally Financial's value and its price as these two are different measures arrived at by different means. Investors typically determine Ally Financial value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Ally Financial's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.