Ally Financial Inc.

AI-generated fair value estimate for this company.

Method: Residual income / excess-return (justified P/TBV) model: tangible book value per share $43.75, sustainable long-run ROE 11.0% (blend of current TTM ROE of 9.68% and analyst-forecast ROE of 11.6% in 3 years), cost of equity 11.5% (CAPM: ~4.3% risk-free rate + ~1.3 beta x ~5.5% equity risk premium, reflecting auto-lending/subprime cyclicality), long-run growth 3%. Justified P/TBV = (ROE - g) / (r - g) = (0.110-0.03)/(0.115-0.03) = 0.941x. Value/share = 0.941 x $43.75 = $41.16.

Reasoning: Ally is a bank holding company / auto lender where capex and working-capital-based free cash flow concepts don't translate cleanly, so value is instead captured as tangible book value plus the present value of returns earned above the cost of equity (equivalently, a justified P/TBV multiple), using ROE and cost-of-equity inputs grounded in Ally's current profitability and consensus forecasts for ROE normalization as credit costs ease.