Head to Head Analysis: Ally Financial (NYSE:ALLY) versus Chesswood Group (OTCMKTS:CHWWF)

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

Dividends

Chesswood Group pays an annual dividend of $0.78 per share. Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 2.8%. Chesswood Group pays out 85.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ally Financial pays out 28.3% of its earnings in the form of a dividend. Ally Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

12.6% of Chesswood Group shares are owned by institutional investors. Comparatively, 88.8% of Ally Financial shares are owned by institutional investors. 0.5% of Ally Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Chesswood Group	N/A	N/A	N/A
Ally Financial	16.75%	11.75%	0.79%

Earnings and Valuation

This table compares Chesswood Group and Ally Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chesswood Group	N/A	N/A	N/A	$0.91	N/A
Ally Financial	$7.91 billion	1.63	$852.00 million	$4.24	10.01

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Chesswood Group and Ally Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chesswood Group	0	0	0	0	0.00
Ally Financial	0	2	14	0	2.88

Ally Financial has a consensus price target of $53.64, indicating a potential upside of 26.42%. Given Ally Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Ally Financial is more favorable than Chesswood Group.

Summary

Ally Financial beats Chesswood Group on 12 of the 13 factors compared between the two stocks.

About Chesswood Group

Chesswood Group Limited operates primarily in the specialty finance industry in North America. The company offers micro and small-ticket commercial equipment financing and origination to small and medium-sized businesses through the third-party broker and equipment vendor channels; and commercial equipment financing and loans to small and medium-sized businesses. It also provides home improvement and other consumer financing solutions; credit alternatives to investors; consumer financing for motor vehicle purchasers; and specialized financing solutions. The company was formerly known as Chesswood Income Fund and changed its name to Chesswood Group Limited in January 2011. Chesswood Group Limited was founded in 1982 and is headquartered in Toronto, Canada.

About Ally Financial

Ally Financial Inc., a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, 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. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers’ vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income 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; leveraged loans; and commercial real estate product to serve companies in the nursing facilities, senior housing, and medical office buildings. It also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory 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 based in Detroit, Michigan.