Analysts Are Downgrading These 5 Stocks After Weak Earnings Reports

4. Ally Financial Inc. (NYSE:ALLY)

Number of Hedge Fund Holders: 49

Ally Financial Inc. (NYSE:ALLY) is a Detroit, Michigan-based digital financial services corporation.

The company missed its Q2 2022 EPS estimates due to higher expenses and a rise in the provision for credit losses due to an expectation of higher delinquencies. Adjusted EPS plummeted from $2.03 in Q1 2022 and $2.33 during the same quarter last year to $1.76 and missed the consensus estimate of $1.87. New consumer auto loan origination of $13.3 billion was at the highest level since 2006.

Following the results, John Pancari at Evercore ISI downgraded Ally Financial Inc. (NYSE:ALLY) stock from an Outperform to an In-Line rating with a price target of $36 on July 19. The analyst sees limited upside to the stock as the earnings will be impacted by auto credit normalization. Pancari also observed a rise in auto loan delinquencies on a YoY basis during Q1 and Q2.

Here’s what Oakmark Funds said about Ally Financial Inc. (NYSE:ALLY) in its Q2 2022 investor letter:

“As for Ally Financial, fears of a recession drove the stock price down more than 20% for the period, but business fundamentals have remained strong and the shares now trade for just a mid-single-digit multiple of current earnings. We believe today’s price ignores the funding cost improvements and well-capitalized nature of Ally’s balance sheet. We continue to own both investments given their significant discounts to our estimates of business value.”

Ally Financial Inc. (NYSE:ALLY) was held by 49 hedge funds as of Q1 2022.