Financial Survey: Ally Financial (NYSE:ALLY) versus Cadence Bank (NYSE:CADE)

Cadence Bank (NYSE:CADEGet Free Report) and Ally Financial (NYSE:ALLYGet Free Report) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.

Insider and Institutional Ownership

84.6% of Cadence Bank shares are owned by institutional investors. Comparatively, 88.8% of Ally Financial shares are owned by institutional investors. 2.2% of Cadence Bank shares are owned by company insiders. Comparatively, 0.7% of Ally Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations for Cadence Bank and Ally Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cadence Bank 0 5 6 1 2.67
Ally Financial 3 7 8 0 2.28

Cadence Bank currently has a consensus price target of $31.09, indicating a potential upside of 12.93%. Ally Financial has a consensus price target of $40.00, indicating a potential upside of 0.45%. Given Cadence Bank’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Cadence Bank is more favorable than Ally Financial.

Dividends

Cadence Bank pays an annual dividend of $1.00 per share and has a dividend yield of 3.6%. Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 3.0%. Cadence Bank pays out 31.9% of its earnings in the form of a dividend. Ally Financial pays out 49.0% 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. Cadence Bank has increased its dividend for 13 consecutive years. Cadence Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Cadence Bank 23.83% 8.97% 0.86%
Ally Financial 10.59% 8.35% 0.48%

Volatility and Risk

Cadence Bank has a beta of 0.99, indicating that its stock price is 1% less volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.41, indicating that its stock price is 41% more volatile than the S&P 500.

Earnings & Valuation

This table compares Cadence Bank 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
Cadence Bank $2.19 billion 2.29 $542.30 million $3.13 8.80
Ally Financial $8.21 billion 1.47 $1.02 billion $2.45 16.25

Ally Financial has higher revenue and earnings than Cadence Bank. Cadence Bank 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

Cadence Bank beats Ally Financial on 12 of the 18 factors compared between the two stocks.

About Cadence Bank

(Get Free Report)

Cadence Bank provides commercial banking and financial services. Its products and services include consumer banking, consumer loans, mortgages, home equity lines and loans, credit cards, commercial and business banking, treasury management, specialized and asset-based lending, commercial real estate, equipment financing, and correspondent banking services. The company's products and services also comprise small business administration lending, foreign exchange, wealth management, investment and trust, financial planning, retirement plan management, and personal and business insurance services. Cadence Bank was founded in 1876 and is headquartered in Tupelo, Mississippi.

About Ally Financial

(Get Free Report)

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.

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