American Express vs Ally Financial Which Performs Better?

American Express (AXP) and Ally Financial (ALLY) are two well-known financial services companies with competitive positions in the market. American Express is a globally recognized credit card issuer and financial services provider, offering a range of products and services to consumers and businesses. On the other hand, Ally Financial is a leading digital financial services company, specializing in auto financing, online banking, and investing services. Both companies have shown resilience and growth in the face of economic challenges, making them attractive options for investors.

American Express or Ally Financial?

When comparing American Express and Ally Financial, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between American Express and Ally Financial.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. American Express has a dividend yield of 0.89%, while Ally Financial has a dividend yield of 3.11%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. American Express reports a 5-year dividend growth of 10.01% year and a payout ratio of 19.64%. On the other hand, Ally Financial reports a 5-year dividend growth of 16.47% year and a payout ratio of 54.41%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with American Express P/E ratio at 21.62 and Ally Financial's P/E ratio at 13.40. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. American Express P/B ratio is 7.20 while Ally Financial's P/B ratio is 0.80.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, American Express has seen a 5-year revenue growth of 0.74%, while Ally Financial's is 1.15%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with American Express's ROE at 34.09% and Ally Financial's ROE at 6.31%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $296.78 for American Express and $38.13 for Ally Financial. Over the past year, American Express's prices ranged from $167.77 to $307.82, with a yearly change of 83.48%. Ally Financial's prices fluctuated between $29.68 and $45.46, with a yearly change of 53.14%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.