Consumer Portfolio Services (NASDAQ:CPSS) and Ally Financial (NYSE:ALLY) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, valuation, institutional ownership, analyst recommendations, earnings, risk and dividends.
Ally Financial pays an annual dividend of $0.60 per share and has a dividend yield of 2.2%. Consumer Portfolio Services does not pay a dividend. Ally Financial pays out 25.1% of its earnings in the form of a dividend.
This is a breakdown of recent recommendations and price targets for Consumer Portfolio Services and Ally Financial, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Consumer Portfolio Services||0||0||2||0||3.00|
Consumer Portfolio Services currently has a consensus price target of $5.50, indicating a potential upside of 44.74%. Ally Financial has a consensus price target of $32.84, indicating a potential upside of 22.77%. Given Consumer Portfolio Services’ stronger consensus rating and higher probable upside, research analysts clearly believe Consumer Portfolio Services is more favorable than Ally Financial.
Volatility and Risk
Consumer Portfolio Services has a beta of 1.71, indicating that its stock price is 71% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500.
This table compares Consumer Portfolio Services and Ally Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Consumer Portfolio Services||0.24%||8.51%||0.66%|
Earnings and Valuation
This table compares Consumer Portfolio Services and Ally Financial’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Consumer Portfolio Services||$434.38 million||0.20||$3.76 million||$0.80||4.75|
|Ally Financial||$9.87 billion||1.14||$929.00 million||$2.39||11.19|
Ally Financial has higher revenue and earnings than Consumer Portfolio Services. Consumer Portfolio Services is trading at a lower price-to-earnings ratio than Ally Financial, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
41.7% of Consumer Portfolio Services shares are held by institutional investors. Comparatively, 99.0% of Ally Financial shares are held by institutional investors. 46.2% of Consumer Portfolio Services shares are held by insiders. Comparatively, 0.2% of Ally Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Ally Financial beats Consumer Portfolio Services on 11 of the 16 factors compared between the two stocks.
About Consumer Portfolio Services
Consumer Portfolio Services, Inc. operates as a specialty finance company in the United States. It purchases and services retail automobile contracts originated by franchised automobile dealers and select independent dealers in the sale of new and used automobiles, light trucks, and passenger vans. The company, through its automobile contract purchases, offers indirect financing to the customers of dealers with limited credit histories, low incomes, or past credit problems. It serves as an alternative source of financing for dealers, facilitating sales to customers who might not be able to obtain financing from commercial banks, credit unions, and the captive finance companies. The company also acquires installment purchase contracts in four merger and acquisition transactions; and offers financing directly to sub-prime consumers to facilitate their purchase of a new or used automobile, light truck, or passenger van. Consumer Portfolio Services, Inc. services its automobile contracts through its branches in California, Nevada, Virginia, Florida, and Illinois. The company was founded in 1991 and is headquartered in Irvine, California.
About Ally Financial
Ally Financial Inc. provides various financial products and services for consumers, businesses, automotive dealers, and corporate clients in the United States and Canada. The company operates Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment provides automotive financing services to consumers and automotive dealers. Its automotive finance services include providing retail installment sales contracts, loans and leases, term loans to dealers, financing dealer floorplans, other lines of credit to dealers, warehouse lines to companies, and fleet financing. This segment also offers financing services to companies and municipalities for the purchase or lease of vehicles and equipment, 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. The Mortgage Finance Operations segment manages held-for-investment consumer mortgage finance loan portfolio that includes bulk purchases of high-quality jumbo and LMI 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. Its primary focus is on businesses owned by private equity sponsors with loans used for leveraged buyouts, mergers and acquisitions, debt refinancing, restructurings, and working capital. The company, through its subsidiary, Ally Bank, also offers commercial banking products and services. In addition, it provides digital wealth management and online brokerage platform 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 headquartered in Detroit, Michigan.
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