Comparing Ally Financial (NYSE:ALLY) and LendingTree (NASDAQ:TREE)

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for LendingTree and Ally Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LendingTree	0	2	4	0	2.67
Ally Financial	1	5	10	1	2.65

LendingTree presently has a consensus price target of $53.60, suggesting a potential upside of 47.07%. Ally Financial has a consensus price target of $47.93, suggesting a potential upside of 25.76%. Given LendingTree’s stronger consensus rating and higher possible upside, research analysts plainly believe LendingTree is more favorable than Ally Financial.

Volatility and Risk

LendingTree has a beta of 1.99, meaning that its stock price is 99% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
LendingTree	7.60%	15.92%	5.40%
Ally Financial	16.84%	12.11%	0.81%

Institutional and Insider Ownership

68.3% of LendingTree shares are held by institutional investors. Comparatively, 88.8% of Ally Financial shares are held by institutional investors. 4.0% of LendingTree shares are held by insiders. Comparatively, 0.5% of Ally Financial 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.

Valuation & Earnings

This table compares LendingTree and Ally Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LendingTree	$1.12 billion	0.46	$151.31 million	$7.02	5.19
Ally Financial	$7.91 billion	1.44	$852.00 million	$4.36	8.74

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

Summary

Ally Financial beats LendingTree on 8 of the 15 factors compared between the two stocks.

About LendingTree

LendingTree, Inc. operates an online marketplace that helps consumers compare financial products and services from a network of lenders, insurers and other providers. Its platform is designed to connect shoppers with potential offers based on their financial needs and preferences. The company’s marketplace includes products such as mortgages and other home loans, personal loans, business loans, auto loans, credit cards, insurance and deposit accounts. LendingTree also provides educational content, comparison tools and financial guidance intended to help consumers evaluate borrowing, insurance and saving options.

About Ally Financial

Ally Financial Inc. is a U.S. digital financial services company and bank holding company. Its primary businesses include automotive finance and consumer banking, with products and services offered through digital channels and a network of auto dealerships. Through its automotive finance operations, Ally provides loans and leases to vehicle buyers, financing to dealerships, and related services. Ally Bank offers consumer deposit products, including checking accounts, savings accounts and certificates of deposit, as well as lending products.