Barclays vs Ally Financial Which Offers More Value?

Barclays and Ally Financial are two prominent players in the financial services industry, with both companies offering a range of financial products and services to customers worldwide. Investors looking to add banking stocks to their portfolio may consider comparing Barclays and Ally Financial. While Barclays has a long-established presence in the industry, Ally Financial is a newer player that has rapidly grown in popularity. Both stocks have their strengths and weaknesses, making them worth evaluating for potential investment opportunities.

Barclays or Ally Financial?

When comparing Barclays 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 Barclays 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. Barclays has a dividend yield of 3.88%, while Ally Financial has a dividend yield of 3.18%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Barclays reports a 5-year dividend growth of 9.63% year and a payout ratio of 0.00%. 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 Barclays P/E ratio at 36.56 and Ally Financial's P/E ratio at 13.10. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Barclays P/B ratio is 2.58 while Ally Financial's P/B ratio is 0.79.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Barclays has seen a 5-year revenue growth of -0.76%, while Ally Financial's is 1.15%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Barclays's ROE at 8.15% 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 $13.51 for Barclays and $37.25 for Ally Financial. Over the past year, Barclays's prices ranged from $7.07 to $13.83, with a yearly change of 95.62%. Ally Financial's prices fluctuated between $31.77 and $45.46, with a yearly change of 43.07%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.