Ally Financial (NYSE:ALLY) and First Bancorp (NASDAQ:FBNC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.
Insider and Institutional Ownership
92.5% of Ally Financial shares are held by institutional investors. Comparatively, 76.7% of First Bancorp shares are held by institutional investors. 0.5% of Ally Financial shares are held by insiders. Comparatively, 2.3% of First Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a summary of current ratings and target prices for Ally Financial and First Bancorp, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ally Financial currently has a consensus price target of $55.67, suggesting a potential upside of 7.59%. First Bancorp has a consensus price target of $51.00, suggesting a potential upside of 31.11%. Given First Bancorp’s higher probable upside, analysts plainly believe First Bancorp is more favorable than Ally Financial.
Earnings and Valuation
This table compares Ally Financial and First Bancorp’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ally Financial||$6.69 billion||2.79||$1.09 billion||$3.03||17.08|
|First Bancorp||$319.03 million||3.47||$81.48 million||$2.59||15.02|
Ally Financial has higher revenue and earnings than First Bancorp. First Bancorp is trading at a lower price-to-earnings ratio than Ally Financial, indicating that it is currently the more affordable of the two stocks.
Ally Financial pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. First Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 2.1%. Ally Financial pays out 33.0% of its earnings in the form of a dividend. First Bancorp pays out 30.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. First Bancorp has raised its dividend for 1 consecutive years. First Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
Ally Financial has a beta of 1.6, meaning that its stock price is 60% more volatile than the S&P 500. Comparatively, First Bancorp has a beta of 1.3, meaning that its stock price is 30% more volatile than the S&P 500.
This table compares Ally Financial and First Bancorp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Ally Financial beats First Bancorp on 10 of the 17 factors compared between the two stocks.
About Ally Financial
Ally Financial, Inc. is a holding company, which provides digital financial services to consumers, businesses, automotive dealers, and corporate clients. It operates through the following segments: Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations. The Automotive Finance Operations segment offers retail installment sales contracts, loans and leases, offering term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to companies, fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles and equipment, and vehicle remarketing services. The Insurance Operations segment focuses on finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. The Mortgage Finance Operations segment consists of the management of a held-for-investment consumer mortgage finance loan portfolio, which includes bulk purchases of jumbo and LMI mortgage loans originated by third parties. The Corporate Finance Operations segment provides senior secured leveraged
About First Bancorp
First Bancorp operates as a bank holding company, which engages banking activities, with the acceptance of deposits and the making of loans. It provides range of deposit products such as checking, savings, NOW and money market accounts, as well as time deposits, including various types of certificates of deposits CDs and individual retirement accounts. The company’s offerings include credit cards, debit cards, letters of credit; safe deposit box rentals, bank money orders and electronic funds transfer services, including wire transfers. It provides loans for a range of consumer and commercial purposes, including loans for business, agriculture, real estate, personal uses, home improvement and automobiles. The company was founded on December 8, 1983 and is headquartered in Southern Pines, NC.
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