Comparing EZCORP (NASDAQ:EZPW) and Ally Financial (NYSE:ALLY)

Ally Financial (NYSE:ALLY) and EZCORP (NASDAQ:EZPW) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.

Institutional and Insider Ownership

88.8% of Ally Financial shares are held by institutional investors. Comparatively, 99.8% of EZCORP shares are held by institutional investors. 0.6% of Ally Financial shares are held by company insiders. Comparatively, 2.1% of EZCORP shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Volatility and Risk

Ally Financial has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, EZCORP has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations for Ally Financial and EZCORP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ally Financial	2	6	10	0	2.44
EZCORP	0	2	2	1	2.80

Ally Financial presently has a consensus price target of $41.88, indicating a potential upside of 10.42%. EZCORP has a consensus price target of $18.25, indicating a potential upside of 37.01%. Given EZCORP’s stronger consensus rating and higher probable upside, analysts clearly believe EZCORP is more favorable than Ally Financial.

Earnings and Valuation

This table compares Ally Financial and EZCORP”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ally Financial	$8.18 billion	1.42	$668.00 million	$1.36	27.88
EZCORP	$1.16 billion	0.63	$83.10 million	$1.19	11.19

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Ally Financial	6.96%	9.53%	0.59%
EZCORP	7.45%	11.53%	5.97%

Summary

EZCORP beats Ally Financial on 8 of the 15 factors compared between the two stocks.

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.

About EZCORP

EZCORP, Inc. provides pawn services in the United States and Latin America. The company operates through three segments: U.S. Pawn, Latin America Pawn, and Other Investments. The company offers pawn loans collateralized by tangible personal property, jewelry, consumer electronics, tools, sporting goods, and musical instruments. It also retails merchandise, primarily collateral forfeited from pawn lending operations and pre-owned merchandise purchased from customers. In addition, the company provides EZ+, a web-based application that allow customers to manage their pawn transactions, layaways, and loyalty rewards online. Further, it operates under the EZPAWN, Value Pawn & Jewelry, Empeño Fácil, Cash Apoyo Efectivo, GuatePrenda, and MaxiEfectivo brands. EZCORP, Inc. was incorporated in 1989 and is headquartered in Austin, Texas.