Head to Head Review: Atlanticus (NASDAQ:ATLC) and Ally Financial (NYSE:ALLY)

Atlanticus (NASDAQ:ATLC) and Ally Financial (NYSE:ALLY) are both financial services companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, valuation, risk, profitability, analyst recommendations and dividends.

Insider & Institutional Ownership

14.1% of Atlanticus shares are owned by institutional investors. Comparatively, 88.8% of Ally Financial shares are owned by institutional investors. 51.8% of Atlanticus shares are owned by insiders. Comparatively, 0.7% 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 is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Atlanticus	8.42%	25.32%	3.73%
Ally Financial	10.26%	8.37%	0.48%

Risk & Volatility

Atlanticus has a beta of 1.92, suggesting that its share price is 92% more volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.39, suggesting that its share price is 39% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Atlanticus and Ally Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atlanticus	0	1	2	0	2.67
Ally Financial	1	7	9	0	2.47

Atlanticus currently has a consensus target price of $41.00, suggesting a potential upside of 12.51%. Ally Financial has a consensus target price of $40.38, suggesting a potential upside of 17.30%. Given Ally Financial’s higher probable upside, analysts clearly believe Ally Financial is more favorable than Atlanticus.

Valuation & Earnings

This table compares Atlanticus and Ally Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atlanticus	$262.48 million	2.05	$102.85 million	$4.24	8.59
Ally Financial	$8.83 billion	1.19	$1.02 billion	$2.45	14.05

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

About Atlanticus

Atlanticus Holdings Corporation, a financial technology company, provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance. The Credit as a Service segment originates a range of consumer loan products, such as private label and general purpose credit cards originated by lenders through various channels, including retail and healthcare, direct mail solicitation, digital marketing, and partnerships with third parties; and offers credit to their customers for the purchase of various goods and services, including consumer electronics, furniture, elective medical procedures, healthcare, and home-improvements by partnering with retailers, healthcare providers, and other service providers. This segment also offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms. The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products. It also invests in and services portfolios of credit card receivables. The company was founded in 1996 and is headquartered in Atlanta, Georgia.

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.