Head to Head Analysis: Encore Capital Group (ECPG) and Ally Financial (ALLY)
Encore Capital Group (NASDAQ: ECPG) and Ally Financial (NYSE:ALLY) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, risk, dividends and earnings.
Ally Financial pays an annual dividend of $0.48 per share and has a dividend yield of 2.2%. Encore Capital Group does not pay a dividend. Ally Financial pays out 24.5% of its earnings in the form of a dividend.
This table compares Encore Capital Group and Ally Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Encore Capital Group||6.28%||12.38%||1.86%|
Risk and Volatility
Encore Capital Group has a beta of 1.77, meaning that its stock price is 77% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.42, meaning that its stock price is 42% more volatile than the S&P 500.
This is a breakdown of current ratings for Encore Capital Group and Ally Financial, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Encore Capital Group||0||4||1||0||2.20|
Encore Capital Group presently has a consensus price target of $35.90, suggesting a potential downside of 8.65%. Ally Financial has a consensus price target of $25.58, suggesting a potential upside of 15.92%. Given Ally Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Ally Financial is more favorable than Encore Capital Group.
Valuation & Earnings
This table compares Encore Capital Group and Ally Financial’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Encore Capital Group||$1.01 billion||1.00||$257.54 million||$2.44||16.11|
|Ally Financial||$5.95 billion||1.78||$940.41 million||$1.96||11.26|
Ally Financial has higher revenue and earnings than Encore Capital Group. Ally Financial is trading at a lower price-to-earnings ratio than Encore Capital Group, indicating that it is currently the more affordable of the two stocks.
Ally Financial beats Encore Capital Group on 8 of the 14 factors compared between the two stocks.
Encore Capital Group Company Profile
Encore Capital Group, Inc., through its subsidiaries, is a specialty finance company providing debt recovery solutions for consumers and property owners across a range of financial assets. The Company operates through Portfolio Purchasing and Recovery segment. The Company’s geographical segments include the United States, Europe and other. The Company’s portfolios of defaulted consumer receivables at discounts and manages them by partnering with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial commitments to credit originators, including banks, credit unions, consumer finance companies, commercial retailers, and telecommunication companies. Defaulted receivables also include receivables subject to bankruptcy proceedings. The Company through certain subsidiaries, is engaged in portfolio purchasing and recovery in the United States, including Puerto Rico.
Ally Financial Company Profile
Ally Financial Inc. is a digital financial services company. The Company is a bank and financial holding company. Its segments include Automotive Finance operations, Insurance operations, Mortgage Finance operations, Corporate Finance operations, and Corporate and Other. The Automotive Finance operations segment provides the United States-based automotive financing services to consumers and automotive dealers, and automotive and equipment financing services to companies and municipalities. The Insurance operations segment offers both consumer finance protection and insurance products sold through the automotive dealer channel, and commercial insurance products sold directly to dealers. The Mortgage Finance operations segment consists of the management of a held-for-investment consumer mortgage finance loan portfolio. The Corporate Finance operations segment provides senior secured leveraged cash flow and asset-based loans to mostly the United States-based middle market companies.
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